Full year trading update 2022
News & Insights
17 May 2022
News & Insights
17 May 2022
Meeting market expectations and strong growth in US Secure Payments
- Revenue in line with market expectations, profit ahead
- Strong ARR growth in US Secure Payments; resilient performance in the UK
- Expectation of material growth in FY23
Eckoh plc (AIM:ECK), the global provider of customer engagement security solutions, is pleased to announce a trading update for the year ended 31 March 2022.
The Board confirms that revenue for the year was in line with consensus market expectations*. Operating profit grew strongly, some 5% ahead of consensus market expectations. This is an excellent outcome given the ongoing challenges presented by the pandemic and the now planned completed exit from US and UK Support, which had contributed £2m to the previous year's profit figure.
Our strong performance reflects ongoing progress in our US Secure Payments operation, which now accounts for nearly 90% of total US revenues. There was more than 20% organic growth in US ARR. Including Syntec, US ARR ended the period at $12.7m, nearly 60% higher than last year.
The UK business returned to growth, and transactional volumes have largely returned to pre-pandemic levels with just a few exceptions. Since period end our largest contract renewal scheduled for this financial year, a contract through Capita for a large public service organization, was successfully renewed for £2.1m over the term.
Our recently announced implementation of a new Microsoft Azure cloud platform with a Fortune 100 US retailer is now live, making Eckoh the only provider in our industry to offer alternative cloud providers. This supports our stated strategy to continue investing in broadening our cloud proposition geographically, and with multiple suppliers and product offerings.
Syntec's contribution to revenue and profits in the final quarter of the year was consistent with our expectations at the time of the transaction, and the integration of the businesses is proceeding on plan. Unification of the technology and product offering is making excellent progress and we expect to deliver a unified and enhanced go-to-market proposition in the second half.
The balance sheet remains strong with net cash of £2.8m (FY21: £11.7m), well ahead of expectations. The change reflects the acquisition of Syntec in December 2021, which was part funded by cash.
The Board expects revenue and profit for FY23 to be significantly higher than FY22. FY23 guidance for material growth reflects the successful integration of Syntec to derive synergistic benefits, an anticipated return to normal UK trading activity, ongoing momentum in US Secure Payments supported by long-term structural growth drivers, cloud adoption, coupled with the benefits of new products and operational gearing. These expectations are subject to ongoing uncertainty in the macro-economic climate.
This announcement contains inside information for the purposes of Article 7 of Regulation 596/2014.
* Eckoh believes that consensus market expectations for the year ending 31 March 2022 is revenue of £32.15 million, Adjusted Operating profit of £4.90 million and Net cash of £1.1m.
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