Cloudcall : 2020 Annual Report and Financial Statement

Cloudcall Group plc

Annual Report and Financial Statements 2020 Group Overview

Contents
Highlights ................................................................................................................................................................	1
Group overview ......................................................................................................................................................	2
Strategic Report .....................................................................................................................................................	5
Chairman's Statement ..............................................................................................................................	5
Chief Executive's review..........................................................................................................................	9
Key performance indicators ...................................................................................................................	19
Financial review ......................................................................................................................................	22
Principal risks and uncertainties ............................................................................................................	26
Governance Report ..............................................................................................................................................	34
Corporate governance statement.........................................................................................................	34
Corporate social responsibility .............................................................................................................	40
The Board................................................................................................................................................	45
Audit committee report ........................................................................................................................	48
Remuneration committee report ..........................................................................................................	51
Directors' report ...................................................................................................................................................	56
Statement of Directors' Responsibilities .................................................................................................	59
Independent Auditor's Report to the members of Cloudcall Group plc ..........................................................	60
Consolidated Statement of Comprehensive Income.........................................................................................	69
Consolidated and Company Statements of Financial Position...........................................................................	70
Consolidated and Company Statements of Changes in Equity ..........................................................................	71
Consolidated and Company Cash Flow Statements ...........................................................................................	74
Notes to the Financial Statements ......................................................................................................................	77

1	Cloudcall Group plc
	Registered number: 05509873

Cloudcall Group plc

Annual Report and Financial Statements 2020 Group Overview

Financial highlights

• Total recurring revenues* up 13% compared to 2019 including growth in US recurring revenues of 25%
• Total revenues up 4% to £11.8m (2019: £11.4m) with recurring and repeating
  revenues* representing 95% of total revenues (2019: 89%)
• Total number of end-users up 14% to 48,255 (2019: 42,348)
• Gross margin increased to 81% (2019: 79%)
• Adjusted EBITDA** loss of £4.4m (2019: £2.2m)
• Loss after tax of £5.7m (2019: £2.9m)
• R&D tax credit received during the year of £811k (2019: £621k)
• Available cash of £5.7m (2019: £13.1m)

Operational highlights

• Growth post initial COVID-19 impact restored, with many KPIs now back to or above pre-COVID-19 levels
• Successful launch of Cloudcall services in Australia
• Launch of Microsoft Teams integration & 'Property and Real Estate' vertical
• 8 new or refreshed CRM integrations, including 3 CRMs in the new 'Property & Real Estate vertical' significantly expanding the number of companies able to benefit from CloudCall's deeply integrated communications
• Executive management team strengthened to execute the Group's growth strategy
• Strong recovery in H2 2020 has continued into 2021 with performance since the end of the year in line with management expectations

*Recurring revenue is derived from contracted subscription-based products. Repeating revenue is related to pay-as-you-go telephony and SMS revenue which, whilst not directly contracted, has a high degree of visibility and predictability.

** Adjusted EBITDA represents operating loss before interest, tax, depreciation, amortisation and share based payment expenses.

1	Cloudcall Group plc
	Registered number: 05509873

Cloudcall Group plc

Annual Report and Financial Statements 2020 Group Overview

Group overview

Cloudcall Group plc ("CloudCall" or the "Company") is a UK registered company, quoted on the AIM market of the London Stock Exchange (LSE: CALL). The Company's shares also cross-trade publicly on the OTCQX® Best Market ("OTCQX Market") in the United States, under the ticker "CLLLF". The principal activity of the Company is to act as the holding company.

CloudCall and its subsidiaries (the "Group") operate as a software and integrated communications business that has developed and provides a suite of cloud-based integrated software and communications products and services under the name "CloudCall". The Group's principal activity is to provide products and services designed to improve business performance by enabling multi-channel client communications to be driven from a single user interface by the data held within Customer Relationship Management ("CRM") software.

The CloudCall product suite which spans voice, SMS, instant messaging from desktops and mobile devices allows companies to fully integrate their business communications tools into their CRM software, enabling all customer communications, to be made, recorded, logged and categorised from within the CRM system from which detailed activity reports, analysis and follow-up actions can be easily generated.

The Group's software and integrated communications platform enables over 1,500 customers to drive more effective communications directly from the intelligence that exists within their CRM system.

The Group has approximately 170 staff situated in Leicester (UK), London (UK), Boston (US), Minsk (Belarus) and Sydney (Australia).

The Group's Head Office and Registered Office address is 1 Colton Square, Leicester, LE1 1QH, UK.

Further information can be found on our website www.cloudcall.com.

Our business model

CloudCall is a software company that designs, develops and operates integrated multi-channel communications services for CRM systems. Due to the unique way that the CloudCall system is built, it has the capability to readily integrate with multiple CRM systems.

CloudCall software, working seamlessly with its core telephony and messaging platforms, delivers data- driven, intelligent, cost effective communications services directly to customers via an intuitive user interface that deeply integrates with their CRM system.

CloudCall is a full-service communications provider licensed to operate in multiple countries. CloudCall provides a robust and effective service built on its own cloud-based technology stack.

CloudCall works closely with key CRM partners through which it reaches most of its end customers and their users. CloudCall's current geographic reach extends from North America, through the UK and mainland Europe to Australia and parts of the Asia Pacific (APAC) region. CloudCall contracts directly with the CRM's end-customers, with a small percentage of recurring revenues being paid to the relevant CRM partner for as long as their customer remains a CloudCall customer.

2	Cloudcall Group plc
	Registered number: 05509873

Cloudcall Group plc

Annual Report and Financial Statements 2020 Group Overview

CloudCall services are invoiced monthly in arrears on a per user, per month basis. CloudCall software, telephony and SMS messaging services are either billed as all-inclusive packages, separate bundles of calls or messages for pre-defined usage levels, or on a software plus 'pay as you go' (PAYG) per minute / message basis. Over 95% of the Group's revenues are recurring (monthly subscriptions) or repeating (PAYG) in nature.

Professional services are delivered as part of the service delivery processes and include, testing customers networks, account and user configuration, project management and training fees.

All new customers are regularly contacted throughout the on-boarding process to ensure they remain satisfied and engaged. Following delivery, they are also routinely contacted for post-implementation feedback, looking to identify and resolve any ongoing issues. Existing customers are treated and followed up in a similar way by specialist Key Account and Relationship Management teams. CloudCall provides strong and effective customer support, working to resolve and reduce issues which may cause customers to churn. CloudCall prides itself on its strong and personal customer support capabilities, and views this as a key differentiator in its marketplace.

CloudCall's product management, software development and engineering functions are mostly located in Leicester (UK), although it also operates an offshore software development centre in Minsk (Belarus). Given the recent political unrest in Belarus, this resource is now being migrated to an external provider based in Poland.

CloudCall operates directly in North America through its office in Boston, MA, in Europe through its UK office in Leicester, and in APAC through its Australian presence in Sydney. The Group primarily focuses its products and services on its core CRM partners and verticals. During 2020, the Group expanded its addressable market and broadened its customer base by adding 8 new or refreshed CRM integrations, including 3 CRMs in the new 'Property & Real Estate vertical'.

Our strategy

CloudCall's strategy is built around its belief that communications are significantly more effective when linked to the data a business holds about its customers and prospects. This data is typically held within a CRM system. CloudCall has built a cloud-based integrated communications platform which integrates deeply into CRM systems and which can manage multiple communications channels via a single, intuitive user interface that also captures key information and logs it back into the CRM system.

An integrated multi-channel communications system such as CloudCall can utilise data stored in the CRM to improve communications workflows, as well as providing powerful reporting and analytics capabilities to generate powerful insights for improving performance.

The CloudCall platform is architected in a way that enables it to integrate with additional CRMs in a consistent, cost effective and efficient manner. This functionality is the bedrock of the Group's growth strategy of expanding its addressable market base by integrating with additional CRMs.

In addition to the well-known generalist CRMs - such as Salesforce.com and Microsoft Dynamics, there are many hundreds or even thousands of 'niche' CRMs, specialising in vertical markets. Whilst CloudCall faces competition from other communications companies who have built some form of integration with the larger

3	Cloudcall Group plc
	Registered number: 05509873