Revenue and gross profit grew by 8%30 Sep 2022 10:21
6th Sept - Half Year report to 30th June 2022 - strong business IMHO
Key Highlights - The Group continued to perform strongly in the first six months of the year with good gross profit growth flowing through to Adjusted EBITDA and significant cash generation.
Financial highlights
The UK business units continued to perform well. In Europe, Germany's strong growth out performed the more subdued performance in the smaller Spanish and Dutch businesses:
· Revenue and gross profit grew by 8% to £234.7m and £120.4m respectively (H1 2021: £217.4m and £111.7m), with gross margin being maintained and Adjusted EBITDA growing by 13% to £51.9m (H1 2021: £46.0m).
· Recurring revenue (being revenue which is recognised "over time" as per note 3) in the year grew to £208.7m (H1 2021: £194.3m) being maintained at 89% of total revenue.
· UK Indirect Business continued to grow strongly with a focus on the existing partner base. Gross profit increased by 10% to £76.3m (H1 2021: £69.2m) with a stable gross margin.
· UK Direct Business returned to growth, with gross profit increasing 6% to £27.9m (H1 2021: £26.4m). A strong contracted pipeline, significantly ahead when compared to this time last year, supports the growth we anticipate for the full year. As expected gross margin decreased slightly as a result of higher installations and hardware sales which are lower margin.
· European Business, in local currency, delivered gross profit growth of 4%, seeing strong growth in UCaaS users and a good performance from our German business being tempered by some headwinds in our smaller Spanish business. After foreign exchange ("FX") translation, the European business gross profit was stable at £16.2m (H1 2021 £16.1m).
Product highlights
There continues to be strong volume growth across the major product groups:
· The number of installed SIP Trunks increased, driven by voice enablement of the Microsoft ("MS") Teams via Direct Routing and Operator Connect.
· The number of Horizon (Cloud PBX) users increased by 6% to 716,000 from 676,000 as at 31 December 2021; sales of the Collaborate module grew faster than the core module, increasing by 10% to 69,000 from 63,000.
· The number of Cloud PBX seats in our European business increased by 7% to 137,000 from 128,000 at 31 December 2021 - a slightly higher rate of growth than we are experiencing in the UK and in line with the growth in the European market.
Andrew Belshaw, Interim Chief Executive Officer, commented:
"I am pleased to be presenting the first set of results since I took on my new role. Gamma has had a strong first half. Our Direct business in the UK has returned to growth as we had indicated it would once the effects of COVID had worked through. The UK Indirect business continues to be strong with good growth in the new variants of SIP which support MS Teams users. Our European business has increased the number of Cloud seats by 7% despite a challenging economic environment.
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