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Nothing remote about meeting enabler LoopUp as shares keep rising

LoopUp shares, which floated at a pound a pop in August 2016, were up another 9% today to after the remote meetings enabler said it had a robust first half
Remote meetings camera
The AIM-listed group has managed to provide consistent top-line growth of 39% in 2016; 36% in 2015 and 38% in 2014

Investors in remote meetings enabler LoopUp Group PLC (LON:LOOP), which floated a year ago, must be happy bunnies as the shares jumped higher once again following another bullish trading update.

The shares, which floated at a pound a pop in August 2016, were up another 9% today to 176.5p after the AIM-listed group said it had a robust first half, with revenue, earnings and margin all strongly ahead of last year.

Revenue from its flagship audio conferencing product rose to £8.65mln, up from £6.00mln in the same period last year, representing like-for-like growth of 44.2%.

The group said underlying earnings (EBITDA) in the first-half rose to £1.61mln, up from £890,000 the previous year, while the gross profit margin climbed to 76.8% from 73.7%.

Steve Flavell, LoopUp’s co-chief executive officer, said in today’s statement: "Looking ahead into the second half of 2017, we continue to see strong demand for the LoopUp product and we remain confident in our ability to deliver future growth." 

In March, the company's full-year 2016 numbers confirmed the strong sales growth flagged up in a trading update in January, with the group posting a maiden operating profit of £0.4mln, a turn-around from 2015's £0.4mln loss.

WATCH: LoopUp boss pleased with first set of results since joining AIM

The group has managed to provide consistent top-line growth of 39% in 2016; 36% in 2015 and 38% in 2014.

Geographically speaking, 46% of revenue in 2016 came from the USA, 41% from the UK and 11% from continental Europe, which leaves plenty of scope for growth in the rest of the world (2% of revenues).

Landmark customer wins last year included a global 'magic circle' law firm and a North American financial services firm.

So what is the LoopUp product?

In a nutshell, the company’s core product aims to make audio conferencing a whole lot simpler, and more productive.

It is estimated that 13 minutes – or around a third of these sessions – are wasted trying to patch people or repeating information for the late-comers.

It is an irritant, but if you look at the impact on an international scale and frame it in terms of lost man hours, then it adds up to a £14bn-a-year brake on productivity in the UK and US alone.

So, the company is addressing a potentially massive market.

Sure, there are alternative communications platforms out there developed by software firms and telecommunication companies, but they either fail to address the familiar chaos or are just too complicated to encourage widespread adoption.

LoopUp, on the other hand, thinks it has cracked the problem with its system.

Using Microsoft Outlook it takes just two clicks to organise a meeting and LoopUp sends out alerts to the host when their first guest joins the meeting.

It uses traditional telephony supplied by tier-one operators across four centres globally, but dial-in numbers aren’t the preferred method for joining LoopUp meetings.

Rather, you simply click a link displayed on your computer, smartphone and tablet, and LoopUp then calls you on the phone of your choice.

Onscreen is displayed the participants – so you know who is there and who exactly is talking.

Users can even share biographical details via LinkedIn and there is a “big, orange, Fisher Price-type button” on the desktop that allows them to share documents and presentations.

What its broker says

Back in March, house broker Panmure Gordon said the 2016 sales and EBITDA levels were 3% above its forecasts.

The tech firm has been profitable at the EBITDA level since the final quarter of 2013, so this is no pipe-dream company.

“LoopUp’s patented software guarantees ease of use, and its scalable model addresses a £4.7bn market in which it has grown revenues by 36% CAGR since 2013,” Panmure’s Michael Donnelly said.

Panmure Gordon expects Loop-up to deliver a compound annualised growth rate (CAGR) for profit in excess of 100% through to 2018.

Based on its earnings (EBITDA) forecasts,  LoopUp’s enterprise value (market capitalisation adjusted for cash and debt) is just 10.1 times EBITDA.

International software-as-a-service sector peers trade on a multiple closer to 15 to 20.

The broker described its 150p price target for LoopUp as “conservative”.

Future growth opportunities

The more people a company employs in diverse locations, the greater the need for LoopUp’s technology, which means the company naturally sees mid-to-large enterprises as a growth opportunity.

However, as alluded to above, the professional services sector is also a rich seam for the company to mine, even at the smaller end of the scale, as these customer-facing companies typically have a need to hold remote meetings with their clients.

“We see growth continuing to come from both of those target groups,” Flavell has said.

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LoopUp Group PLC Timeline

March 09 2017

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