CloudCall confident after bumper fourth quarter

Communications and contact centre software provider CloudCall updated the market on its trading for the year ended 31 December on Thursday, confirming that revenues, cash and losses before tax were all expected to be “broadly in line” with market expectations.

The AIM-traded firm said total revenues for the year rose 30% to £11.4m, with the group exiting 2019 with an annualised revenue run rate of more than £13m.

Recurring revenue improved 33% over 2018, which, including repeating telephony income, accounted for 89% of total revenues.

Driven by larger customers, CloudCall said its United States operation continued to perform “particularly strongly”, with the company achieving a US revenue growth rate of over 55% year-on-year, with US revenue now representing about 40% of the group's total revenue.

The total number of users increased 35% to just over 42,300, representing an average net new user growth of 917 per month over the year, which was a 41% increase over 2018.

During the second half, an average of 902 monthly net new users were added compared to 932 in the first half.

The board said the “slightly lower” number in the second half was due to no enterprise deals closing in the third quarter.

However, the fourth quarter recovered “strongly”, and was a record quarter in terms of new orders received and net new user growth of 1,162.

CloudCall also reported that the increased level of interest from larger and enterprise customers, which it indicated in its interim trading statement, had continued during the second half.

There was a “growing pipeline” of those enterprise deals, which the board said it believed should contribute “strongly” towards 2020 growth targets.

The company’s record-breaking fourth quarter was helped by two such enterprise deals. which were expected to go live in 2020, and carried a combined first-year revenue value of more than £0.6m.

Together with the American Cyber Systems (ACS) Group deal announced earlier in the year, those three enterprise customers were expected to generate more than £1m of revenue in 2020.

The company also said net renewal rates from existing customers remained over 100%, which continued to be “demonstrably higher” where those customers were from the recruitment and staffing sector, which remained a key strategic focus area for CloudCall's products and services.

It said its average recurring revenue per user (ARPU) remained constant during the period at around £28 per user per month, as discounts on larger customer wins were offset by cross-selling additional chargeable products or services.

The group also completed an equity fundraise in October, raising net proceeds of £11.3m.

As at 31 December, the company held available cash reserves of about £13.4m, consisting of £11.4m in cash and £2m of headroom on its available-to-be-drawn debt facility.

CloudCall said the 2019 period saw it continue to strengthen its relationship with Bullhorn, which again acquired further recruitment customer relationship management (CRM) deals during the year, increasing the size of its market share and customer base.

In June, Bullhorn amended CloudCall's partner agreement and commission sharing process so that Bullhorn's sales staff were more directly incentivised to recommend CloudCall's products and services.

As a result, the company said it was now seeing greater collaboration and lead flow, particularly from Bullhorn's large and enterprise customers which was one of the primary drivers behind CloudCall’s increase in its pipeline of larger opportunities.

In the second half, the firm announced several new integrations with other recruitment and staffing CRMs, and said it could now see lead-flow and new customer acquisitions from those new partners contributing towards the fourth quarter’s “excellent” results.

Those new CRM partnerships were still in a relatively early stage, with the board saying it expected they would have a greater contribution in 2020 as the relationships developed.

Further CRM integrations and partnerships were also being actively worked on.

Following the October fundraise, CloudCall said it had embarked on a period of investment in the extension of its platform into the Asia-Pacific region, as well as the “further enhancement” of its products and services and significant additional sales and marketing capabilities from which it expected to deliver considerable revenue growth.

“2019 has been another outstanding year for CloudCall,” said chief executive officer Simon Cleaver.

“Not only has the company once again delivered organic revenue growth of 30%, it also successfully raised new capital to fund future growth and strengthen the balance sheet.

“The two standouts for the year are the quantum increase in interest from enterprise companies and the over-50% growth we delivered in the US.”

Cleaver said It was worth noting that the US was now responsible for about 40% of its total revenue, and with nearly half of the total funds raised in the recent placing coming from US investors, he said he had “little doubt” there was a “huge, largely untapped” opportunity for CloudCall in the US, which would be a “key focus” of the company’s sales and marketing expansion.

“CloudCall has a clear strategy to become the leading provider of 'integrated communications'.

“We will continue to build out our product, integrate with more CRMs, expand our geographic reach and engage with ever larger customers - our 4 pillars of growth.”

The company was entering 2020 with “significant” opportunities and a well-funded balance sheet, that Cleaver said was strong enough to capitalise on those opportunities.

“The board continues to be confident in the future outlook for the company.”

At 1538 GMT, shares in CloudCall Group were up 1.79% at 99.75p.