Toople Trading Tops Expectations over Summer

Strong Trading over Summer

The Company has experienced strong order numbers from both existing and new customers over the summer period, substantially ahead of previous summer trading periods as the nation returns to work with hybrid and remote business models that demand the best cloud based telephony and broadband solutions.

Contract Wins and Extensions 

Trading continues to improve across the Group with three significant new contract wins in financial services and well as material extensions to two existing customers. 

The first two contract wins in the financial services sector, with separate credit unions, combine Toople’s expertise of installing and running multi-site communications across cloud based telephony with contracts lasting up to 60 months each. The latter has signed up to the Company’s cloud based telephony system with an increased number of seats and supporting flexible working patterns that weren’t even possible with its existing legacy PBX system.  

Over the past three years Toople has been delivering data connectivity and cloud solutions to a large bakery brand in London.  Higher demand for this brand has been driven by the pandemic and an increase in on-line deliveries and orders from stores supported by Toople's infrastructure. The bakery has pursued a rapid store expansion programme over the summer months, and Toople now has over 70 locations linked to superfast data connectivity, 4G back up facilities, and cloud voice solutions. 

Toople has also recently provided a rapid expansion of cloud voice capabilities to a national building merchant customer, where consumer demand for renovation and building materials have increased sharply during lockdowns and staycations. It has therefore extended its 36 month contract with Toople, which now supports over 200 cloud telephony solutions as it encourages staff to return to the office.

Andy Hollingworth, CEO commented: "Summer is traditionally a quieter period, as existing and potential customers put their plans on hold until the big return to work in September. 

We anticipate continued momentum as many in the UK return to their places of work following many months of lockdowns, shielding, isolation, and voluntary working from home arrangements, as evidenced by very recent contract wins and extensions.”

View from Vox 

There are clear tail winds for companies such as Toople offering SME’s best-in-class Telecom services as the nation returns to work with new hybrid working patterns demanding constant remote access and immediate communication being of utmost importance that legacy systems simply can’t support. 

Todays Trading Update proves two distinct investment points for investors; 1) that summer trading has been exceptionally strong and 2) Toople remains at the forefront of a wave of new Telecom installations that looks set to continue for at least the foreseeable future, underpinning full year expectations. 

We expect Full Year results to demonstrate bad debts are being managed well and the Company is preparing to re-ignite its consolidation strategy, which could bring new investors into the stock for a positive re-rating.

TOOP price chart

Reasons to FOLLOW TOOP

The company successfully completed its “transformational” acquisition of DMS Holdings (DMSL), a firm which provides unified communication services in the UK, back in February 2020.  

The macro drivers for TOOPLE indicate structural growth opportunities across the SME Telecom markets. Its contract wins, and renewals point towards several compelling value propositions from the Company across broadband, mobile, and fixed line services. The return to work using hybrid and remote working patterns will accelerate all these growth drivers as traditional PBX based telephone systems fail to deliver constant remote access and instant communications.

Market Opportunity   

In a previous trading update, Toople said the macro drivers expected to precipitate substantial growth for the Group remain in place, particularly the UK government’s commitment to rolling out fibre telecommunication infrastructure to replace copper.    

The macro drivers expected to precipitate substantial growth for the Group are said to remain in place, namely HM Government's commitment to the rolling out of fibre telecommunication infrastructure to replace the legacy copper infrastructure by 2025 and ‘the necessary and ultimately unavoidable upgrade’ of the UK’s network from 4G to 5G.    

This forms part of the country’s efforts to upgrade its telecoms system to full fibre lines to deliver “gigabit speeds” following concerns that the UK has fallen behind other countries. The UK government aims for full-fibre networks to cover the entire country by 2033.    

Openreach, which controls the UK’s telecoms infrastructure, is building full-fibre to over 4.5 million premises by the end of March 2021 and more than 20 million in the late 2020's. 

Strong Balance Sheet 

Toople’s strong balance sheet is expected to provide it with greater flexibility to target additional organic growth opportunities across their target markets, which should lead to a positive outturn for FY20 and accelerate its path to profitability and positive cash flow in FY21. 

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