Cloudcall Share Discussion Threads

[manc10] 17/1/2020 07:48

Tw loves this share

[140661] 17/1/2020 07:32

Canaccord are the Company's broker. Companies of this size tend not to have more than their own broker following the stock. Canaccord raised £12m for the Company back in October from mainly US institutions who see the stock as very cheap compared to US competitors.The Company has £11m cash on the balance sheet and is growing at 30%pa so should hit profitability in the next 18 months and revenues moving towards an annualised run rate of £20m; so should be worth at least £50m, probably a lot higher, which is approximately 100% above today's price. Finally, its worth remembering that most (circa 90%) of the revenues are recurring so highly recession proof.

[a.fewbob] 16/1/2020 20:27

How recession proof is this company?

[ali47fish] 16/1/2020 17:45

140661 which broker does this come from please or add alink if thete is one!

[140661] 16/1/2020 11:16

The brokers remain optimistic and have a target price of 170p which is still putting the shares on a 40% discount to fair value.

30% organic growth; deal wins & pipeline provide healthy 2020 visibility
In our recent initiation, we highlighted that the shares are an attractive combination of growth and visibility at a heavily discounted valuation for small-cap investors looking to gain exposure to the enterprise automation theme.
Today's trading statement reveals 2019 revenues of £11.4m, a smidgen below our £11.5m forecast, implying 2H19 growth of 31% yoy with US growth of 55% a standout.
Average monthly new subscribers/users of 902 in 2H were shy of guidance of ~1k due to timing of 'go lives', but the 4Q run-rate of 1,162 is the best ever for the company.
Based on management comments, our analysis suggests CloudCall may already have visibility on >90% of our expected 2020 sales of £15.0m (+30% yoy), underpinning our forecasts and growth expectations.
We leave estimates and our target price unchanged and look forward to detailed results in March.
Given the healthy growth momentum and visibility into 2020, we continue to view the shares' 2.2x EV/Sales valuation as too low and reiterate BUY, with our 170p target assuming a conservative 40% discount to peers yet implying >70% upside potential.
Strong organic growth...
CloudCall expects 2019 revenues of £11.4m implying 2H19 sales of £6.2m, up 31% yoy and continuing on its ~30% growth trajectory. As we pointed out in our initiation, we believe adverse FX (weaker $/£) is largely to blame for the company coming in just shy of its 'in the region of £11.7m' revenue guidance (CGe £11.5m). However, 55% yoy growth in the US is impressive and at 40% of total sales it is closing in on the UK in terms of size. ~90% of sales remain repeatable with ~80% contractually recurring subscriptions.


...and healthy 2020 visibility
Based on management comments, our analysis on page 2 suggests that CloudCall may already have good visibility on >90% of our £15m sales forecast for 2020 (+30% yoy). This takes into account the 2019 exit run-rate of £13m and adds £1m in contribution from already signed deals. The resultant ~£14m in sales implies only £1m in new sales are needed to deliver our £15m expectation. Such good visibility at this early stage in the year is, in our view, highly encouraging and underpins our estimates.


Undervalued given strong organic growth
CloudCall's ~30% organic growth is higher than most of its listed peers, yet the shares trade at a significant discount - 2.2x 2020 EV/Sales vs ~7.5x for listed UCaaS & customer engagement automation peers.

We believe that a certain discount is warranted to reflect expected operating losses and the low liquidity in the shares. However, we detailed before how CloudCall's cash is spent well as new subscriptions are highly accretive with an LTV:CAC ratio of >7x implying a positive NPV/subscriber of ~£900 and an ROI on CAC of 3.4x. We hence view this sizable discount as too harsh with our 170p target implying a ~4x multiple or, in our view more reasonable, ~40% discount.

Even in a cautious scenario where the shares did not re-rate meaningfully from current levels, we think long-term shareholders could reasonably expect a TSR in line with expected revenue growth of 25% to 30% per year in the mid- to long-term. We reiterate BUY.

[deltrotter] 16/1/2020 10:38

Growth seems to have stalled to me.....

[horndean eagle] 16/1/2020 10:09

I think they have missed forecasts again. Broadly in line would generally suggest that. Jam tomorrow forever really. Instead of that £12m fund raise they should have looked to sell up instead. Might have got a decent premium bid. Otherwise a long wait on the cards.

[jimbojet17] 16/1/2020 09:01

The fact this isn't up big is such an opportunity for those that are aware of CALL. Very few companies consistently deliver this sort of growth, and in my opinion the management deserve some credit for that. They have been know to paint a rosy picture, but unless they're lying the headlines here are very positive and continue trending in the right direction. LONG BIG TIME!

[the millipede] 16/1/2020 08:29

And they still seem to have a lot of cash.

[zipstuck] 16/1/2020 08:20

The most important figure on this update is that the ARR is already higher than last years total revenue.

[deltrotter] 16/1/2020 08:08

Aye, to be fair, they never fail to deliver bullish updates!

[rsmith57] 16/1/2020 07:43

Bullish update as ever today

[deltrotter] 16/1/2020 07:42

There you go Millipede...

[the millipede] 13/1/2020 14:28

Anyone know, can we expect a trading update this week or next?

[davr0s] 04/12/2019 08:21

Based on what?

[riostroy] 04/12/2019 08:19

I bought 1500 today - but it is not displayed in here

[deltrotter] 04/12/2019 08:10

Placing coming up???

[the millipede] 21/11/2019 11:29

Yep. I get that disappointment. But, leaving aside what has been said, there have always been two legitimate approaches to enhancing shareholder value here.

My view is the company has been clear about this all along.

The first is to prioritise break even, cash generation and profitability, then use that cash and those profits to fund further growth.

The second is to raise money and prioritise growth, and the "significant additional costs" are part of that.

Obviously they have gone for the latter and I am happy about that (it seems I am perhaps one of the few smaller shareholders who prefers what they have done rather than the alternative.)

But I do understand the other view.

[sdmbot] 21/11/2019 10:32

Likewise, I'm an erstwhile holder and this seems to be a perpetual Jam Tomorrow company, after three years of being promised break-even I felt my money would be better invested elsewhere.

As a British tech business I hope it succeeds in the long term, but I think my expectations and those of the management are not aligned!

[pj 1] 21/11/2019 10:08

Unfortunately the Presentations by the Company to Private Investors over the years, since 2013 have always hidden what the true Business Plan is. At the first Mello event in Derby they spent days promoting cash break even by the then year end. It was all a Bluff which has continued as they realised Investors repetitively believe the hype.

Now they have ''significant additional costs''?

I wish you all good luck but I wouldn't be expecting Profits in 2021

or 2022

or 2023...

[the millipede] 21/11/2019 09:33

As a fairly long term supporter of this company I have to admit the reported losses are going to worsen in the short term.

But I think this is an inevitable consequence of their business model, which requires quite intensive sales effort upfront; as well as the high growth story which means by the time results are released they are already old news.

The key metrics remain the same: cash burn and annualised recurring revenue, which has now reached £1m per month. Churn is still low, and the company is close to becoming cash flow positive.

IMO amazing progress given where CALL was five years ago. Whether this is good value at £40m market cap with the amount of cash they have is the question. I am sure others can explain all this more eloquently than I can but I think it is decent value, I believe we are on the cusp of large returns and won't be selling.

[rivaldo] 20/11/2019 13:47

Arden have today revised their forecasts and hugely widened the losses to come due to "significant additional costs":

this year - £3.45m loss (from £3.09m loss)
next year - £4.72m loss (from £1.35m loss)

I've had CALL on my watch list for some years, but the valuation has always been too rich, and these new forecasts just reinforce the decision to sit and wait.

[the millipede] 06/11/2019 07:38

More US interest. Good.

[140661] 29/10/2019 07:09

Hopefully yesterdays share price rise was the beginning of a recovery. The market has certainly ignored the recent announcement that monthly turnover exceeded £1m level and that the fund raising was very well supported. I suppose you can understand the markets reluctance to get too excited given the missed promises of the past but perhaps management are about to deliver, lets hope so!