LoopUp looks to the cloud after transformational 2022
Despite facing challenges during the transition period caused by the COVID-19 pandemic, hybrid communications group () experienced a significant commercial turnaround in FY22, making substantial progress in its primary Cloud Telephony business and receiving a boost for its ex-growth Meetings segment from its tie up with PGi Connect.
Although revenues of £16.5 million were 15% down on the previous year, the company witnessed a strong bounce back in the second half of the year, generating generated £9.9 million in revenue, surpassing the £6.6 million revenue achieved in the first half and £8.0 million in the corresponding period in 2021.
The turning point came in October 2022 with the implementation of the 'Revenue Sharing and Customer Transfer Agreement' with PGi Connect. This agreement led to over 7,000 customers transitioning from PGi Connect to LoopUp Meetings, resulting in a 167% increase in Q4 22 revenue compared to the previous quarter. Although the Meetings business is expected to gradually decline as customers migrate to more comprehensive Unified Communications (UC) platforms like Microsoft Teams, it continues to be a valuable source of cash generation for LoopUp.
That cash is being deployed to fuel the growth of the company's Cloud Telephony business, which was launched in September 2020 and has been experiencing rapid expansion, with the number of customers increasing from 29 at the end of 2021 to 78 at the end of last year. Booked Annual Recurring Revenue (ARR) from these customers reached £1.65 million at the end of 2022, marking a 188% year-on-year increase. LoopUp expects this ARR to progress to approximately £3.2 million as the deployments advance, surpassing the minimum contracted level.
LoopUp Group's Cloud Telephony solution, which is seamlessly integrated into Microsoft Teams, has gained significant traction and is a key driver of the company's growth strategy. The solution allows users to make and receive phone calls to external numbers using their Teams-enabled devices, providing a consolidated telephony procurement option for multinational organizations.
With a robust pipeline of future Cloud Telephony sales opportunities, estimated at approximately £100 million ARR, LoopUp is confident in its continued growth, pointing to the potential of its differentiated multinational solution in the rapidly expanding Cloud Telephony market, which is projected to grow from £21.2 billion in 2022 to £31.4 billion by 2027.
The company said it’s on track to meet 2023 expectations, with sales forecast to recover to £20.7m leading to EPS of 0.4p – which means the shares trade on a lowly forecast PE ratio of just 6.6x.
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