Cloudcall Share Discussion Threads

[deltrotter] 25/9/2018 15:56

Rinse and repeat

[the millipede] 20/9/2018 17:50

Nice. It is hard to please some people IMO.

Annualised recurring revenue above £9m, low churn rate, and the company remains confident they “have sufficient cash to support the business plan.”

Seems fairly positive to me. BWDIK.

[bookbroker] 19/9/2018 16:37

Cleaver is a worzel, used to hold these under its previous disguise, he is a great spin merchant, but this technology is so yesterday, see this heading the same way as HoF. A minnow within a reservoir!

[zipstuck] 19/9/2018 13:25

Compared to the last statement in July did not seem as positive om time frame.

[deltrotter] 18/9/2018 09:03

Need a game changer IMO.

[phowdo] 18/9/2018 08:59

Probably need to do a CashCALL

[davemac3] 18/9/2018 08:43

Webinar might be interesting

[bookbroker] 07/8/2018 10:17

Cleaver like Phil Letts, ex. Blur, a total fanny merchant, can talk the talk, but when it comes to walking he can only crawl!

[deltrotter] 07/8/2018 10:16

To be fair - the company has done really well to survive for so long.

The amount of spin they put out on the back of poor results is incredible.

And people have bought that spin continually.

[deltrotter] 07/8/2018 09:56

Twas ever thus....

I have been here long enough to remember the 'game changer' cloudcall chrome.

What you say???

Exactly.

8-(

[horndean eagle] 07/8/2018 09:47

unfortunately the company is hugely accident prone. Nothing seems to have changed on that front. Really think SC may need to go. Had thought with the new chairman we would do much better. We did for a year or 2 but unfortunately its gone wrong again and shareholders have long memories.

[the millipede] 06/8/2018 19:14

Some disappointment with the recent trading update.

HTH.

[ali47fish] 31/7/2018 19:02

why has this tumbled so quickly to 126p?

[brucie5] 24/7/2018 12:14

Thanks Michael, I'm always interested in your thoughts. Do you have a portfolio somewhere that we can look at - fantasy or otherwise? We seem to have some similar ideas.

[michaelmouse] 20/7/2018 13:20

I might have sold mine for the points I outlined, but the guy bought 15000 at £1.40 or £21,000 worth. That's positive not negative. The directors still have considerable skin in the game, and there are still a number of bull points going forward. The company is still growing.

[ali47fish] 20/7/2018 09:04

neds buys 15000 shres no much

[michaelmouse] 19/7/2018 20:15

Just read post 520:-

A takeover is certainly still a possibility with Bullhorn's involvement.

However, this is interesting and illustrates my point about being cautious:-

"The current market cap is extremely low for a SaaS business that's not far off profitability. Just look at the valuation of LoopUp (LON:LOOP) to see what can be achieved in this sector."

It's an example of forgetting basic valuation principles and starting to believe that p/e's of 50 plus are the norm.

I haven't looked in detail at Loopup, but at first glance it looks like one of those hideously over-valued stocks I've referred to. P/E of 95. How many companies can keep near doubling earnings year on year to justify such a rating?

Momentum stocks rule at the moment, but it won't last forever.

Anyway good luck with Cloudcall since it still does have a number of bull points, and nobody can predict when the market will turn bearish.

[michaelmouse] 19/7/2018 18:59

Just my thoughts.

[zipstuck] 19/7/2018 12:14

Like the company but will wait for the fundraising when the picture is clearer

[deltrotter] 18/7/2018 16:33

Agreed interesting viewpoint.

BUT, Paul could save himself some writing and just copy and paste the same EVERY TIME CALL announce results....

[the millipede] 18/7/2018 14:04

Thanks 140661.... and Paul. Interesting viewpoint.

[140661] 18/7/2018 13:55

The next section is written by Paul Scott, who owns CALL shares.
Cloudcall (LON:CALL)
· Share price: 134.5p (+2%)

· No. of shares: 24 million

· Market cap: £32 million
Half-year trading update
Somewhat belatedly, here are my comments, in response to reader requests above, on the Cloudcall (LON:CALL) trading update yesterday. I hold a long position in CALL shares.
Firstly, it was clearly a profit warning, but a fairly mild one. The 2 brokers which report on CALL (both make their research available to subscribers of Research Tree) both put out updates, reducing 2018 revenue forecasts from c.£9.5m to c.£9.0m.
One broker reduces its 2018 EBITDA loss from £2.4m to £3.1m, and the other reduces from a £1.9m EBITDA loss, to a £2.9m loss, so quite a significant drop in forecasts at the EBITDA level.

What's gone wrong? The company says it's all down to timing of recruiting & training new sales people, which has taken longer than expected. It says there's not a problem with customer demand, they just didn't have the internal resource to bolt on new customers at the pace required.
The brokers clearly believe that explanation, as they have not reduced revenues forecasts for 2019. The company also talks about expecting a strong H2 in 2018, as the new recruits kick in.
If it all pans out as the company suggests, then the current share price weakness should prove negative. The trouble is that the company has proven somewhat accident-prone in the past (repeatedly missing targets, especially on cash burn), so investors are wise to take the company's outlook comments with a degree of scepticism. That doesn't make it a bad company, but I'm just pointing out that it tends to be overly optimistic, and then disappoints a bit. But that's within an overall picture of strongly growing revenues (which have risen organically from £3.3m just 3 years ago, to forecast c.£9m this year - that's very impressive growth).

Organic growth - is still very impressive, as noted above. The market tends to put a significant premium on the price of any company delivering over, say 20% organic growth at the top line. CALL is still well above that, at +31% Y-on-Y revenues growth in H1 of 2018. That's still a very impressive growth rate, albeit below the previous forecast of c.39%. I don't think the company should be punished too hard for this.
I like to look at not just year-on-year growth, but also sequential half year growth. This has been;

H1 2017 £3.2m

H2 2017 £3.7m (up 15.6% on previous half year)

H1 2018 £4.1m (up 10.8% on previous half year)

So there's been a slowing there, but still good growth.

Note also that the company has sticky, recurring revenues - because its product is excellent (I use it myself). Cashflow is hence highly predictable, with customer receipts coming in regular as clockwork each month. Customer retention levels are high, because people find the product so useful. That's key for building a SaaS business. Gross margins are also very high - again a key point.
Will it need more cash? Almost certainly, yes in my view. Does that matter? Not at all, in my view. There is no reason for shareholders to worry about another fundraising, because the company is well beyond the blue sky stage, when fundraisings are uncertain & can be done at deep discounts if investors are nervous. CloudCall's business model is now proven, and if it needs say another £3m to push it over the line into profitability, then that would only be about 10% dilution, and I reckon Instis would be queuing up to participate.
Evidence for this is that the last placing raised £5.7m in late 2017, and was priced at 143.5p, only a 5.3% discount to the then share price of 151.5p.

The only circumstances in which CALL would struggle to raise more equity, would be if the whole market turns bearish, and/or if CALL's revenue growth grinds to a halt. If that happens, then we'd be looking at a much lower share price, for sure. But that hasn't happened, hence why I think worries about another placing are wide of the mark. It's not a worry to me at all, for the reasons given.

Note that the company has a track record of repeatedly stating that it will not need to raise more cash, and then going on to raise more cash! So the reassurances given in the latest update that it has adequate cash resources, and worthless in my view, given the history. But it doesn't actually matter either way.

Is this a buying opportunity? That's obviously up to each individual to decide for themselves. I see this as a "good" profit warning - i.e. temporary, fixable problems, with the business model & growth story intact, just slightly blunted in H1.
The share price recently peaked at 193p. So being able to buy at 135p today, seems an attractive proposition to me. I can understand emotions kicking in, and some investors' patience wearing thin, but taking a longer term view, this share could be worth substantially more, once you factor in a few more years' strong growth, and the eventual move into profit.

Tech shares like this are not really valued on profits at the moment. The market is instead placing more emphasis on growth, with strong organic growth (combined with lots of operational gearing here, from high gross margin) should attract a premium rating.

There are plenty of private equity buyers around, willing to pay eye-watering valuations for growth tech companies. I would welcome a takeover bid for CloudCall, providing the premium is sufficiently large. It doesn't sit well in the stock market, where people are too focused on short term performance. Whereas, the better option for a growth company is to set aside short term profitability, and instead "go for it" in terms of growth, which might mean incurring heavy losses in the short term.

For stock market investors, CloudCall has been frustrating, in that the runway to profitability seems to be extended each year, by a year! The company is increasing its costs to take advantage of growth potential (and extending the features of its product), but with the time-lag inherent with that type of spending, it results in administrative costs relentlessly increasing, and absorbing the benefits of increased sales/gross margin. Hence why I don't think CALL should be listed on the stock market - it would be better off as a private company, and able to press on with faster, but more cash-consuming growth in the short term.

Overall, I think that for investors who are prepared to be patient, then we should do well out of this one in the long-term. The current market cap is extremely low for a SaaS business that's not far off profitability. Just look at the valuation of LoopUp (LON:LOOP) to see what can be achieved in this sector.
Regards, Paul.

[horndean eagle] 17/7/2018 17:40

Simon has been too excitable over the years. You could argue it might be time for a change and bring in someone with better skills at managing sales. He did have a moan that vc backed companies he was competing against were given huge budgets and had no pressure to deliver financials. To some extent he is right but operationally he has been weak for most of the time Call has been listed. Shouldn't get too downbeat though. Company is still growing pretty well and at some point or other will start to make money and then be afforded a very racy multiple. If shares fell a fair bit from here I imagine it might even get some takeover interest.