Full year results 2022

Group and US ARR growing strongly; transformational Syntec acquisition progressing well; expectation of material growth in FY23

Eckoh plc (AIM: ECK), the global provider of Customer Engagement Security Solutions, is pleased to announce results for the twelve months to 31 March 2022.

Strategic highlights

• Strong ARR¹ growth, especially in the US market, driven primarily by our clients' need to protect data and comply with increasing regulation without compromising customer experience
• UK business returned to growth with strong second half revenues as most client activity recovered
• Transformational Syntec acquisition performing in line with our expectations with integration on track
  • Unification and enhancement of product offering on track for go-to-market launch in 2022
• As part of our long-term strategic direction, multi-platform cloud-enablement of our offering is driving:
  • Market leadership and competitive advantage
  • Scalability into larger client opportunities on an international basis, characterised by recent contracts
  • Significant cross-sell opportunities and faster deployments will drive increased client value
• Realignment of sales capability and go-to-market proposition to drive top-line growth, and restructuring of cost base to create greater operational efficiency

Current trading and Outlook

• Current order levels already substantially exceed FY22's first quarter outcome
• Significant strengthening of Eckoh's new business pipeline in the first quarter, including major opportunities for large blue-chip organisations
  • Progress reflects success with our strategy to pursue larger, higher quality opportunities through management action to improve sales function
  • Renewals post-period end includes our largest contract scheduled for FY23, worth £2.1m
• First client deployed and live on our new Azure Cloud platform signed new 3-year contract worth $1.4m for voice security and a further contract worth $0.6m to secure live chat agents with digital payments
• As previously stated, the Board expects FY23 revenue and profit to be significantly higher than FY22, driven by strong organic ARR growth, operational efficiencies and synergistic benefits of the Syntec integration
• The Board is confident of further progress in the year ahead, supported by an encouraging pipeline, a model with high recurring revenues and a robust balance sheet.

Financial highlights

• Strong performance, as previously announced in Trading Update on 17 May 2022
• Group ARR¹ up 48%, reflecting market opportunity and ongoing shift to cloud
• Adjusted operating profit³ up 10% with successful pivot to higher quality earnings following the completed exit from US and UK Support, which contributed £2m to FY21 adjusted operating profit
• US Secure Payments performed strongly:
  • Revenue up 8%, underlying growth stronger
  • US ARR¹ up 38% on an organic basis and 82% including Syntec
• UK revenues returned to growth with transactional volumes largely returned to pre-pandemic levels
  • Revenue up 9%, excluding third-party support or 3% total
  • UK ARR¹ of £16.5m, up 8% on an organic basis and up 36% including Syntec
• Profit before taxation includes £1.0m of transactional costs (in connection with the acquisition of Syntec) and £0.9m of one-off restructuring costs
• Balance sheet remains strong following the Syntec acquisition with net cash of £2.8m (FY21: £11.7m)
• Increased final proposed Dividend at 0.67p per share (FY21: 0.61p), demonstrating increasing confidence in the ongoing growth opportunity

Nik Philpot, Chief Executive Officer, said:

"Eckoh has made significant progress in the last 12 months. We have shown the resilience of our business model, with growth in revenue and operating profit and improved quality of earnings with the completed exit from our Support activity. Our momentum is underpinned by fast-growing recurring revenues, with an excellent performance in our US business and a return to growth in the UK.

We successfully completed the transformational acquisition of Syntec, which enhanced our position as the largest provider in our industry. The integration is progressing well and our unified product suite will extend our market-leading position in Customer Engagement Security Solutions. Our new multi-platform, cloud delivery has created differentiation within our industry by offering greater customer choice, enabling us to deliver our services efficiently and at scale, and address significantly larger and global mandates.

We have started the year strongly, and looking ahead the Board expects FY23 revenue and profits to be significantly higher than FY22, reflecting our ongoing organic growth, continued momentum in the US market, a sustained recovery in UK trading, and the integration of Syntec. In addition, we expect our progress to be supported by long-term structural growth drivers and increasing cloud adoption, coupled with the benefits of new products and operational gearing."

DOWNLOAD AS PDF

PRESENTATION

ANNUAL REPORT 2022

1. ^{ARR is the annual recurring revenue of all contracts billing at the end of the period. Included within Group ARR is all revenue that is contractually committed and an element of UK revenue that has proven to be repeatable, but not contractually committed.}

2. ^{Adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) are the profit before tax adjusted for depreciation of owned and leased assets, amortisation of intangible assets, expenses relating to share option schemes, restructuring costs and transactional costs.}

3. ^{Adjusted operating profit is the profit before tax adjusted for amortisation of acquired intangible assets, expenses relating to share option schemes, restructuring and transactional costs}