REG - Eckoh PLC - Trading Update and Notice of Results

EckohAnnouncement

09/05/2024 07:00

For best results when printing this announcement, please click on link below:
http://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20240509:nRSI6983Na&default-theme=true

RNS Number : 6983N  Eckoh PLC  09 May 2024

09 May 2024

Eckoh plc

("Eckoh", the "Group", or the "Company")

 

FY24 Trading Update & Notice of Results

 

- Profit and cash in line with market expectations

- Record new contracted business in North America, up 44% year-on-year

 - Record year of total contracted business at £52.6m driven by high
renewals and strong H2 new business

- Client transition to cloud-based solutions continues at pace, driving ARR
and margin enhancement

 

Eckoh plc (AIM: ECK), the global provider of Customer Engagement Data Security
Solutions, today announces a trading update for the year ended 31 March 2024
(the "Year").

 

Trading Performance

 

The Board expects to report revenues of approximately £37.2m for the Year
(FY23 £38.8m) which, although slightly behind market expectations(1) is a
result of the  ongoing transition of client deployments to the cloud, the
first contract renewals of several large on-premise US clients (where there
are no ongoing associated hardware revenues and set up charges), and the
elongated sales cycles that delayed the closing of contracts in H1.

In contrast, Eckoh expects to report adjusted operating profit of
approximately £8.3m (FY23 £7.7m), marginally ahead of market
expectations(1), which represents a 17% increase on FY23 pre-forex(2). The
higher proportion of cloud-based SaaS revenues and ongoing cost efficiency
meant the Group saw operating margin improvement as well as strong cash
generation, with an improved net cash position of £8.3m at the end of the
Year (FY23 £5.7m), also marginally ahead of market expectations.

 

Record Contracted Business

 

In H1 Eckoh won a record level of total contracted business(3) (defined as the
combination of contract renewal value and new business value from either new
clients or existing clients) and this trend continued in H2. This resulted in
£52.6m of total contracted business in the Year, over 50% higher than FY23
and a record for the Company. As anticipated, the level of new contracted
business(4) increased substantially in H2, more than double that of H1,
leading to £18.7m of new contracted business won in the Year (FY23 £14.4m).

 

In North America, our single biggest growth market, the Company won a record
level of both renewals and new contracted business in the Year, with $33.7m of
total contracted business and $16.3m of new contracted business (for Security
Solutions), 87% and 44% higher than FY23 respectively. Progress in North
America has been driven by successfully closing deals delayed from H1, winning
an unusually high number of large multi-year renewals, successful
cross-selling and up-selling our new solutions and the ongoing transition to
cloud-based deployments by our clients.

 

As previously announced, the closing of several sizable enterprise deals where
Eckoh was the chosen supplier slipped into H2 - most of which have now closed
- the remaining ones are still in progress and contribute to a record North
American sales pipeline. The Company continues to experience elongated sales
cycles with new enterprise clients, especially in the final contracting phase,
however the cross-selling strategy for existing accounts should help moderate
these delays as the sales cycle for these opportunities is shorter.

 

Recurring Revenue Improvement

 

While our successful drive to transition clients to cloud-based solutions is
tempering revenue growth in the short term, it is having a positive impact on
the visibility of revenues, which has increased. Recurring revenue in North
America grew by 11% year-on-year, and for the first time, all new client
contract wins in the Year were for cloud-based delivery and we expect this
trend to continue.

 

Eckoh expects to report good progress in North America with Security Solutions
exit Annual Recurring Revenue(5) ('ARR') up organically by 6% to $16.8m (FY23
$15.9m), which represents a CAGR of 29% since FY21. The delay in signing new
business in H1 has temporarily slowed the ARR growth in this region, however
when taking into account the contracts signed in H2 that are expected to
commence billing in the first half of FY25, that growth rises a further 14%
and will lead to a meaningful positive impact on the revenue in the second
half of FY25. The Group's ARR now represents 83% of Group revenue, a 5%
increase on the prior year (FY23 78%).

 

Nik Philpot, Chief Executive Officer, said: "At our interim results in
November we said that the first half had been all about excellent contract
renewals and that the second half would be all about new business wins, so
it's gratifying to see the record levels of new business coming through. We
have built a strong pipeline of exciting new business opportunities and we are
already seeing tangible signs of the impact the new version of the PCI
standard is having, with an increased number of formal tender processes as
companies look to outsource this challenging requirement to a specialist like
Eckoh.

 

Our unusually high level of multi-year renewals (including many that were not
scheduled until this year), alongside our newly won clients, gives us
excellent revenue visibility and improves our ability to further increase our
strong cross-sell and upsell pipeline. We expect total renewal value to be
lower this year because of the size and timing of those clients whose
contracts are due to expire, but we expect levels of new business coming from
our existing client base to grow significantly and our operating margin to
improve further as we leverage our cloud platform and new product set.

 

The fact that all new client wins this year were for cloud delivery
illustrates the pace of cloud transition, and whilst this reduces our headline
revenue growth it improves revenue visibility and margin. We are confident
that Eckoh is well placed to consolidate our market-leading position by
assisting enterprises with the significant challenges that they are facing
globally to keep their customers' data and engagements secure."

 

Notification of Interim Results announcement

 

Eckoh expects to announce its results for the year ended 31 March 2024 on
Tuesday 11 June 2024.

 

 

1.        Eckoh believes that consensus market expectations for the
year ended 31 March 2024 are for revenue of £38.9m, adjusted operating profit
of £8.2m and net cash of £8.2m.

2.        In FY23, the Company's operating performance benefitted from
a £0.5m currency tailwind versus a £0.1m headwind in FY24.

3.        Total contracted business includes new business from new and
existing clients, as well as renewals with existing clients.

4.        New contracted business includes new business from new
clients and new business from existing clients.

5.        ARR is the annual recurring revenue of all contracts billing
at the end of the period.

 

- Ends-

 

For more information, please contact:

 

 Eckoh plc                                                 Tel: 01442 458 300
 Nik Philpot, Chief Executive Officer
 Chrissie Herbert, Chief Financial Officer
 www.eckoh.com (http://www.eckoh.com/)

 FTI Consulting LLP                                        Tel: 020 3727 1017
 Ed Bridges / Emma Hall / Valerija Cymbal / Yasmin Prior
 eckoh@fticonsulting.com (mailto:eckoh@fticonsulting.com)

                                                           Tel: 020 7496 3000

 Singer Capital Markets (Nomad & Joint Broker)
 Shaun Dobson / Tom Salvesen / Alex Bond
 www.singercm.com (http://www.singercm.com/)

 Investec Bank plc (Joint Broker)                          Tel: 020 7597 5970
 Patrick Robb / Nick Prowting / Shalin Bhamra
 www.investec.com (http://www.investec.com/)

 

 

About Eckoh plc

As a global provider of Customer Engagement Data Security Solutions, Eckoh is
all about making the world of data more secure.

 

Our vision is that everyone should be able to trust every brand and engage
without risk to their personal information. We're on a mission to set the
standard for secure interactions between consumers and the world's leading
brands, and our innovative products build trust and deliver value though
exceptional experiences.

 

We're trusted by many of the world's leading brands to help them manage the
personal data from customer enquiries and transactions safely. Our solutions
enable payment transactions to be performed securely and help protect
sensitive personal data across any customer engagement channel and device the
customer chooses.

 

Protected by multiple patents, our solutions remove sensitive personal and
payment data from contact centres and IT environments, as the best way to
secure data is not to collect it. This allows organisations to be not just
compliant but secure, increase efficiency, lower operational costs, and
provide an excellent customer experience.  This is our specialism.

 

Our solutions are delivered globally through multiple cloud platforms or can
be deployed on the client's site. They offer merchants a simple and effective
way to reduce the risk of fraud, secure sensitive data and become compliant
with the Payment Card Industry Data Security Standards ("PCI DSS") and wider
data security regulations.  Eckoh has been a PCI DSS Level One Accredited
Service Provider since 2010, and our extensive portfolio of typically large
enterprise clients spans a broad range of vertical markets including
government departments, telecoms providers, retailers, utility providers and
financial services organisations.

 

For more information go to www.eckoh.com (http://www.eckoh.com/)  or
email MediaResponseUK@eckoh.com (mailto:MediaResponseUK@eckoh.com) .

 

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact
rns@lseg.com (mailto:rns@lseg.com)
 or visit
www.rns.com (http://www.rns.com/)
.

RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our
Privacy Policy (https://www.lseg.com/privacy-and-cookie-policy)
.   END  TSTVVLFBZELZBBL