Eckoh : Full year results 2023

Eckoh plc

("Eckoh", the "Group", or the "Company")

Full year audited results for year ended 31 March 2023

- Significant double-digit revenue and profit growth, with profit and cash ahead of expectations
- Group and North America Security Solutions ARR growing strongly
- Cloud proposition and transition driving growth in key North American market
- Enhanced data security solutions portfolio has expanded addressable market and customer value
- Increased revenue visibility and encouraging new business pipeline supports confidence for FY24

Eckoh plc (AIM: ECK), the global provider of Customer Engagement Data Security Solutions, is pleased to announce full year audited results for the year ended 31 March 2023.

Nik Philpot, Chief Executive Officer, said: "Our full year results clearly show our strategy is working. This performance is underpinned by the strategic progress we've made in developing a market-leading, cloud-first suite of solutions, and the successful integration of Syntec across our processes, products, and teams. We are particularly encouraged by the 34% organic ARR growth in North America, which underlines the scale of the market opportunity we see in that region.

At Eckoh we're on a mission to make customer data arising from customer engagement more secure, and we believe that consumers should be able to trust every brand and engage without risk. We've already been chosen by some of the largest global brands to ensure their customer data and payments are handled securely. Tightening data regulations and the shift to home working has created new security and performance challenges for enterprise contact centres, which significantly expands the opportunity for us. With our new go-to-market proposition, our commercial team now reorganised as a single global team focused on the significant North American market, scalable cloud platforms and an expanded software portfolio, we are well placed to convert our pipeline of new business opportunities and capitalise on Eckoh's already sizable addressable market."

£m (IFRS unless otherwise stated)	FY23	FY22	Change
Revenue	38.8	31.8	+22%
Gross profit	31.2	25.4	+23%
North America (NA) Security Solutions ARR ($m)1	15.9	11.9	+34%
Total ARR2	30.4	25.8	+18%
Adjusted EBITDA3	9.4	6.8	+38%
Adjusted operating profit4	7.7	5.2	+48%
Profit before taxation	5.0	2.3	+117%
Basic earnings pence per share	1.58	0.59	+167%
Adjusted diluted earnings pence per share5	2.09	1.34	+56%
Net cash	5.7	2.8	+102%
Proposed final dividend (pence)	0.74	0.67	+10%
Total contracted business6	34.5	22.5	+53%
New contracted business7	14.4	10.8	+33%

Financial Highlights

• Revenue for the year increased by 22% to £38.8 million (FY22: £31.8 million) and at constant exchange rates by 16%, driven by organic growth and the full year impact from the acquisition of Syntec in December 2021
• Adjusted operating profit4 up 48% to £7.7m, driven by sales growth, increased cross selling, operational leverage, and a £0.5m favourable impact from FX movements
• Growth in adjusted diluted earnings per share demonstrates good organic growth from the underlying business combined with the impact of the earnings enhancing acquisition of Syntec in December 2021
• Excellent performance from North American Data Security Solutions, where we have the largest addressable market and a significant opportunity for continued strong growth:
  • North American Data Security Solutions ARR1 up 34% and revenue up 25%
  • Recurring revenue increased 54% driven by ongoing cloud transition and successful contract renewals
• Refreshed go-to-market strategy drove up new contracted business principally through winning cloud deployed deals and international mandates in North America, which accounted for 71% of all new business
• UK and Ireland (UK&I) and Rest of World showed a resilient performance with revenue up 10%
• Balance sheet remains strong with net cash ahead of expectations8 at £5.7m (FY22: £2.8m)
• Proposed final dividend of 0.74p per share (FY22: 0.67p), demonstrating confidence in our product portfolio and the clear opportunity to capitalise on the scale of the North American opportunity

Strategic highlights

• Strategic focus and cloud delivered solutions supports our scalable growth:
  • By offering cloud platform choice and multiple SaaS solutions without additional deployment effort, we deliver scalability into larger client opportunities in North America and across international mandates, with significant cross-sell opportunities and faster new client deployments, increasing client lifetime value
• Our proprietary cloud Secure Call Recording product was launched in April 2023, to an encouraging response:
  • Expected to support the growth in cross selling and generate new client contracts at a time when 24% of US contact centres are looking to update their call recording solution in the next 12 months*
• Global Commercial team now fully aligned to our strategic focus on the North American market:
  • Embedded a unified proposition into our new go-to-market vision of Customer Engagement Data Security Solutions, formally launched in April 2023
  • TAM in North America is currently estimated to be 20 times the value of the UK market
• Total contracted business showed strong growth through securing new business wins and several successful renewals with key clients in North America
• Notable new client wins and successful renewals during the period included:
  • A Fortune 100 retailer, purchasing two solutions; first client to go-live on our new Azure cloud platform
  • New two-year voice security contract across more than 20 territories with a leading, global hotel company
  • New global reseller contract with a US based unified communications company, 3 contracts delivered to date

Current trading and Outlook

• Positive start to the year with total order value more than £7m in the first two months
• The Board is confident of further progress in the year ahead, supported by an encouraging new business pipeline, increased revenue visibility through continued ARR growth and a robust balance sheet and cash position
• Eckoh is well placed to benefit from favourable industry trends in its target markets including the shift to hybrid contact centre working and increasing regulatory requirements around personal data management

* Source: Contact Babel - US Contact Centers 2022-2026 the State of the Industry