TIDMLOOP
RNS Number : 6950G
LoopUp Group PLC
27 November 2020
27 November 2020
LOOPUP GROUP PLC
Trading update
LoopUp Group plc (AIM: LOOP), the cloud platform for premium
external communications, provides the following trading update.
Current Trading
In our recent market communications, we expressed that overall
macro conditions continue to be marked by a high degree of
instability relating to the societal and economic effects of the
Covid-19 pandemic, which has made it challenging to provide
specific guidance on near-term expectations.
Since our 23 September 2020 half-year report, our core
Professional Services(1) ("PS") Meetings and Event businesses, for
which the LoopUp platform is optimised and differentiated, have
continued to trade robustly versus pre-pandemic levels. We have
also continued to see strong momentum in our Cloud Telephony
business since launching it onto our global cloud platform in July
2020. Here we remain confident in our ability to drive attractive,
sustainable and profitable growth.
However, we are seeing an acceleration of churn in non-PS
sectors, where our Meetings capability is less differentiated and
competition is more intense. Here, we expect trading to remain
challenging, although this now represents just 14% of total LoopUp
Platform(2) revenue.
In light of this, the Group now expects FY20 revenue to be no
lower than GBP50 million (c.18% growth on FY2019) and EBITDA to be
no lower than GBP15 million (c.134% growth on FY2019), moderately
below current market expectations. The Group's annualised revenue
run-rate (ARR) currently stands at c.GBP34 million, made up of
c.GBP28 million of LoopUp Platform capabilities (Meetings, Cloud
Telephony and Event) and c.GBP6 million of Cisco resale, which
represents an estimated entry ARR for FY2021 trading.
The stark distinction in trading performance between PS and
non-PS sectors is highlighted by comparing prevailing trading (the
average of September and October 2020) with pre-pandemic levels
(the average of January and February 2020):
-- Minute volumes: 43% higher in PS, but c.10% lower in
non-PS, driven by:
Minutes per user: c.56% higher (broadly consistent
across PS and non-PS) resulting from the large
scale migration towards remote and distributed
working
Non-PS churn: an increase to c.30%(3) in non-PS,
where competition is greater and where certain
non-PS sectors are facing degrees of financial
distress and employee furloughing
-- Effective per-minute rates: c.24% lower (broadly consistent
across PS and non-PS), driven by:
Migration to preferred subscription pricing:
committed subscriptions and minimum spend term
contracts (versus pay-as-you-go pricing) now accounting
for c.40% of total LoopUp platform business, up
from c.30% in our half year report (accounting
for c.10 of the 24 percentage points)
A shift in call mix: towards lower-rated domestic
and dial-out minutes and away from higher-rated
international and dial-in minutes (accounting
for c.14 of the 24 percentage points). For example,
North American calling minutes in Asia Pacific
have fallen by more than 60% since the onset of
the pandemic
-- Revenue: which as a result is c.6% higher in PS, but
c.32% lower in non-PS (a 9% lower net)
Strategy and Outlook
Our decision to focus our strategy on PS sectors remains the
right choice, demonstrated by the increase in demand for LoopUp
Meetings in those verticals. Looking forward, our priority is to
cement and grow the strong position we have built in our core PS
market, where external communications are business critical and
warrant a best-in-class capability.
We believe our technology platform represents a valuable asset
to support and grow our premium external cloud communications
offering. During the second half, we have made clear strategic
progress including:
-- Securing flagship wins with three of the world's top-100
law firms, still in the early stages of ramping up, and
we have a pipeline of approximately GBP16 million Annual
Contract Value of live opportunities
-- In October 2020, we launched our new LoopUp Rooms capability,
which enables our Meetings customers to leverage off-the-shelf
hardware to create high quality, plug-and-play video
conferencing suites that are simple and accessible for
all users
-- A company-wide focus on launching our c.GBP3 million
revenue Cloud Telephony business onto our global cloud
platform under the LoopUp brand. In simple terms this
enables our customers to make and receive external calls
via Microsoft Teams. The value proposition is differentiated
through its voice quality and reliability, licensed international
service provision coverage, and deep Microsoft Teams
integration expertise. We have strong momentum:
We expect to be formally licensed and regulated in
more than 30 international jurisdictions by the end
of 2020, and approximately 60 by the end of 2021
Inbound lead generation is responding positively to
content and digital marketing techniques, and is now
generating more than 4-times the inbound lead flow
that we were receiving pre-pandemic
Our pipeline for cloud telephony live opportunities
continues to grow rapidly, now standing at potential
Total Contract Value of approximately GBP84 million(4)
, 68% higher than reported in our half-year statement
We generally expect sales cycles to be approximately
6-8 months, but encouragingly we have already been
selected by a leading private banking group to provide
their global cloud telephony, subject to a successful
3-month proof of concept which starts next month
While trading is expected to remain challenging in the non-PS
part of our Meetings business, this now represents just 14% of our
total LoopUp Platform revenue, and with a continued focus to drive
forward our PS business, it is expected this will have
progressively less impact on overall trading going forward. By
contrast in our core market, we remain confident in our ability to
drive attractive, sustainable and profitable growth of our premium
external cloud communications platform, and therefore plan to
invest to maximize growth and shareholder value creation within the
constraints of our strong GBP11.6 million cash balance (at end
October 2020).
1 Law, investment banking and corporate finance; private
equity and venture capital, asset and fund management,
consulting, accounting, marketing and advertising, PR,
recruiting, and property
2 LoopUp Platform revenue includes Meetings, Cloud Telephony
and Event, but excludes Cisco resale
3 Over a trailing 12-month period, for customers who leave
LoopUp (or whose revenue drops to <5% of historic levels)
in Year X, a ratio of their revenue in Year X-1 to total
platform revenue in Year X-1
4 Assuming an average contract term of 2 years
Market abuse regulation:
This announcement contains inside information for the purposes
of Article 7 of Regulation (EU) No 596/2014.
LoopUp Group plc via FTI
Steve Flavell, co-CEO
+44 (0) 20 7886
Panmure Gordon (UK) Limited 2500
Dominic Morley / Alina Vaskina (Corporate
Finance)
Erik Anderson (Corporate Broking)
+44 (0) 20 7260
Numis Securities Limited 1000
Simon Willis / Jonny Abbott (Corporate Finance)
+44 (0) 20 3727
FTI Consulting, LLP 1000
Matt Dixon / Emma Hall / Jamille Smith / Shamma
Kelly
About LoopUp Group plc:
LoopUp (LSE AIM: LOOP) is a premium cloud communications
solution for business-critical external communications. The
solution combines premium remote meetings with inbound and outbound
cloud voice services via Direct Routing integration with Microsoft
Teams. Our customers benefit from a global fully-managed service,
and an emphasis on security, reliability and simplicity, delivered
with deep domain expertise and caring customer support. We're proud
to be trusted provider to over 5,000 organisations worldwide,
including more than 20 of the world's top-100 law firms as well as
enterprises such as Kia Motors, Planet Hollywood and National
Geographic. The Group is headquartered in London, with offices in
San Francisco, New York, Boston, Chicago, Dallas, Los Angeles,
Denver, Cardiff, Milton Keynes, Madrid, Berlin, Malmo, Hong Kong,
Sydney and Barbados, and is listed on the AIM market of the London
Stock Exchange (LOOP). For further information, please visit:
www.loopup.com .
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