RNS Number : 6950G

LoopUp Group PLC

27 November 2020

27 November 2020


Trading update

LoopUp Group plc (AIM: LOOP), the cloud platform for premium external communications, provides the following trading update.

Current Trading

In our recent market communications, we expressed that overall macro conditions continue to be marked by a high degree of instability relating to the societal and economic effects of the Covid-19 pandemic, which has made it challenging to provide specific guidance on near-term expectations.

Since our 23 September 2020 half-year report, our core Professional Services(1) ("PS") Meetings and Event businesses, for which the LoopUp platform is optimised and differentiated, have continued to trade robustly versus pre-pandemic levels. We have also continued to see strong momentum in our Cloud Telephony business since launching it onto our global cloud platform in July 2020. Here we remain confident in our ability to drive attractive, sustainable and profitable growth.

However, we are seeing an acceleration of churn in non-PS sectors, where our Meetings capability is less differentiated and competition is more intense. Here, we expect trading to remain challenging, although this now represents just 14% of total LoopUp Platform(2) revenue.

In light of this, the Group now expects FY20 revenue to be no lower than GBP50 million (c.18% growth on FY2019) and EBITDA to be no lower than GBP15 million (c.134% growth on FY2019), moderately below current market expectations. The Group's annualised revenue run-rate (ARR) currently stands at c.GBP34 million, made up of c.GBP28 million of LoopUp Platform capabilities (Meetings, Cloud Telephony and Event) and c.GBP6 million of Cisco resale, which represents an estimated entry ARR for FY2021 trading.

The stark distinction in trading performance between PS and non-PS sectors is highlighted by comparing prevailing trading (the average of September and October 2020) with pre-pandemic levels (the average of January and February 2020):

 --   Minute volumes: 43% higher in PS, but c.10% lower in 
       non-PS, driven by: 
        Minutes per user: c.56% higher (broadly consistent 
         across PS and non-PS) resulting from the large 
         scale migration towards remote and distributed 
        Non-PS churn: an increase to c.30%(3) in non-PS, 
         where competition is greater and where certain 
         non-PS sectors are facing degrees of financial 
         distress and employee furloughing 
 --   Effective per-minute rates: c.24% lower (broadly consistent 
       across PS and non-PS), driven by: 
        Migration to preferred subscription pricing: 
         committed subscriptions and minimum spend term 
         contracts (versus pay-as-you-go pricing) now accounting 
         for c.40% of total LoopUp platform business, up 
         from c.30% in our half year report (accounting 
         for c.10 of the 24 percentage points) 
        A shift in call mix: towards lower-rated domestic 
         and dial-out minutes and away from higher-rated 
         international and dial-in minutes (accounting 
         for c.14 of the 24 percentage points). For example, 
         North American calling minutes in Asia Pacific 
         have fallen by more than 60% since the onset of 
         the pandemic 
 --   Revenue: which as a result is c.6% higher in PS, but 
       c.32% lower in non-PS (a 9% lower net) 

Strategy and Outlook

Our decision to focus our strategy on PS sectors remains the right choice, demonstrated by the increase in demand for LoopUp Meetings in those verticals. Looking forward, our priority is to cement and grow the strong position we have built in our core PS market, where external communications are business critical and warrant a best-in-class capability.

We believe our technology platform represents a valuable asset to support and grow our premium external cloud communications offering. During the second half, we have made clear strategic progress including:

 --            Securing flagship wins with three of the world's top-100 
                law firms, still in the early stages of ramping up, and 
                we have a pipeline of approximately GBP16 million Annual 
                Contract Value of live opportunities 
 --            In October 2020, we launched our new LoopUp Rooms capability, 
                which enables our Meetings customers to leverage off-the-shelf 
                hardware to create high quality, plug-and-play video 
                conferencing suites that are simple and accessible for 
                all users 
 --            A company-wide focus on launching our c.GBP3 million 
                revenue Cloud Telephony business onto our global cloud 
                platform under the LoopUp brand. In simple terms this 
                enables our customers to make and receive external calls 
                via Microsoft Teams. The value proposition is differentiated 
                through its voice quality and reliability, licensed international 
                service provision coverage, and deep Microsoft Teams 
                integration expertise. We have strong momentum: 
                    We expect to be formally licensed and regulated in 
                     more than 30 international jurisdictions by the end 
                     of 2020, and approximately 60 by the end of 2021 
                    Inbound lead generation is responding positively to 
                     content and digital marketing techniques, and is now 
                     generating more than 4-times the inbound lead flow 
                     that we were receiving pre-pandemic 
                    Our pipeline for cloud telephony live opportunities 
                     continues to grow rapidly, now standing at potential 
                     Total Contract Value of approximately GBP84 million(4) 
                     , 68% higher than reported in our half-year statement 
                    We generally expect sales cycles to be approximately 
                     6-8 months, but encouragingly we have already been 
                     selected by a leading private banking group to provide 
                     their global cloud telephony, subject to a successful 
                     3-month proof of concept which starts next month 

While trading is expected to remain challenging in the non-PS part of our Meetings business, this now represents just 14% of our total LoopUp Platform revenue, and with a continued focus to drive forward our PS business, it is expected this will have progressively less impact on overall trading going forward. By contrast in our core market, we remain confident in our ability to drive attractive, sustainable and profitable growth of our premium external cloud communications platform, and therefore plan to invest to maximize growth and shareholder value creation within the constraints of our strong GBP11.6 million cash balance (at end October 2020).

 1   Law, investment banking and corporate finance; private 
      equity and venture capital, asset and fund management, 
      consulting, accounting, marketing and advertising, PR, 
      recruiting, and property 
 2   LoopUp Platform revenue includes Meetings, Cloud Telephony 
      and Event, but excludes Cisco resale 
 3   Over a trailing 12-month period, for customers who leave 
      LoopUp (or whose revenue drops to <5% of historic levels) 
      in Year X, a ratio of their revenue in Year X-1 to total 
      platform revenue in Year X-1 
 4   Assuming an average contract term of 2 years 

Market abuse regulation:

This announcement contains inside information for the purposes of Article 7 of Regulation (EU) No 596/2014.

LoopUp Group plc                                  via FTI 
Steve Flavell, co-CEO 
                                                    +44 (0) 20 7886 
  Panmure Gordon (UK) Limited                       2500 
Dominic Morley / Alina Vaskina (Corporate 
Erik Anderson (Corporate Broking) 
                                                  +44 (0) 20 7260 
Numis Securities Limited                           1000 
Simon Willis / Jonny Abbott (Corporate Finance) 
                                                  +44 (0) 20 3727 
FTI Consulting, LLP                                1000 
Matt Dixon / Emma Hall / Jamille Smith / Shamma 

About LoopUp Group plc:

LoopUp (LSE AIM: LOOP) is a premium cloud communications solution for business-critical external communications. The solution combines premium remote meetings with inbound and outbound cloud voice services via Direct Routing integration with Microsoft Teams. Our customers benefit from a global fully-managed service, and an emphasis on security, reliability and simplicity, delivered with deep domain expertise and caring customer support. We're proud to be trusted provider to over 5,000 organisations worldwide, including more than 20 of the world's top-100 law firms as well as enterprises such as Kia Motors, Planet Hollywood and National Geographic. The Group is headquartered in London, with offices in San Francisco, New York, Boston, Chicago, Dallas, Los Angeles, Denver, Cardiff, Milton Keynes, Madrid, Berlin, Malmo, Hong Kong, Sydney and Barbados, and is listed on the AIM market of the London Stock Exchange (LOOP). For further information, please visit: www.loopup.com .

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(END) Dow Jones Newswires

November 27, 2020 02:00 ET (07:00 GMT)