CALL.L Regulatory News (CALL)

10 January 2022

CloudCall Group plc

("CloudCall", the "Company" or the "Group")

Trading Update for the year ended 31 December 2021

REVENUES IN LINE WITH GUIDANCE, GROWTH CONTINUES TO BUILD WITH ANNUAL RUN RATE REVENUES UP 27% ON A CONSTANT CURRENCY BASIS

CloudCall (AIM: CALL, OTCQX: CLLLF), a leading cloud-based software business that integrates communications technology into Customer Relationship Management (CRM) platforms, provides the following trading update for the year to 31 December 2021.

2021 Financial highlights

· Total revenues up 18.2% on a constant currency basis1 (15.0% FX adjusted) with recurring and repeating revenues representing 94.2% of total revenues2 (FY 2020: 95%)

· Closing annualised run-rate revenue2 increased by 25% to £15.3m (FY 2020: £12.2m)

· Total reported FY revenues £13.6m (FY 2020: £11.8m)

· Total customer numbers up 12% to 1,658 (FY 2020: 1,480)

· Net retention rate 101% (FY 2020: 100%)

· Gross cash of £5m with a further £2m available via the Group's existing debt facility with Shawbrook Bank

2021 Operational highlights

· Five new CRM integrations launched in 2021 effectively doubling the Group's addressable market from sweet spot CRMs

· The Group's significantly enhanced mobile-app is delivered to selected customers for beta testing with full availability planned for Q1 2022

· Ongoing investment in internal tools and processes to support scalable growth beginning to deliver benefits

(1) Constant currency revenue has been calculated by applying a fixed USD:GBP exchange rate of 1.3 and AUD:GBP exchange rate of 1.92 to both FY 2020 and FY 2021 revenues.

(2) Recurring revenue is that related to contracted subscription-based products. Repeating revenue is related to pay-as-you-go (PAYG) telephony and SMS revenue which, whilst not directly contracted, has a high degree of visibility and predictability. Annualised run-rate revenue (ARR) = total monthly revenues multiplied by 12 months. To account for normal monthly and seasonal fluctuations, both the non-recurring revenue (NRR) and PAYG income have been calculated on a rolling 6-month average for the purposes of calculating ARR.

RECOMMENDED CASH ACQUISITION OF CLOUDCALL GROUP PLC BY XPLORER CAPITAL GROWTH I, LLC

On 9 December 2021, Xplorer Capital Growth I, LLC (Xplorer Capital), a newly formed company owned by funds advised and managed by Xplorer Capital Management LLC, and CloudCall announced under Rule 2.7 of the City Code on Takeovers and Mergers (the Code) that they had reached agreement on the terms of a recommended cash offer of 81.5 pence per share pursuant to which Xplorer Capital shall acquire the entire issued and to be issued ordinary share capital of CloudCall (the Offer). It is intended that the Offer will be implemented by way of a scheme of arrangement under Part 26 of the Companies Act 2006 (the Scheme).

A circular in relation to the Scheme was published on 15 December 2021 (the Scheme Document). A copy of the Announcement, the Scheme Document and all related documentation can be found on CloudCall's website at: https://www.cloudcall.com/investor/offer-for-cloudcall

TRADING PERFORMANCE

Trading for 2021 has been in line with management expectations and the Group is pleased to confirm that it has achieved total revenues in line with the revised guidance issued during the second half of 2021.

Total revenues increased by 15% to £13.6m and recurring revenues increased by 15% to £11.9m when compared to the previous year. On a constant currency basis, total revenue grew by 18% year on year, driven in the main by the staffing and recruitment sector. Since the middle of last year, the recruitment sector, which represents over 50% of the Group's revenues, has bounced back strongly with sales to new and existing customers growing well throughout the year.

During the course of 2021 the Group has not only performed well signing up new customers but has also seen upsells to existing customers materially increase. This increase in sales to existing customers, alongside underlying churn rates that have remained stable, has contributed to a net retention rate of 101%. The combined effect of strong new business sales, strong SaaS metrics and net retention rates over 100% has resulted in annualised run-rate revenues (ARR) growing from £12.2m exiting 2020, to £15.3m exiting 2021, an overall increase of 25% or 27% on a constant currency basis.

Operational highlights include the beta release of the Group's new Mobile App. Building this in-house has enabled us to address issues from the previous version built on third-party software. This is expected to significantly enhance customers' mobile experience once fully rolled out in early 2022.

2021 also saw the Group add five further CRM partners to its list of integrations, effectively doubling the size of its addressable market from those "sweetspot" CRMs around which its growth strategy is centred.

Ongoing investment in our own internal systems in 2021, which is vital to enable us to scale up more efficiently, has already started to yield benefits within our service delivery and support functions. Early 2022 will see further upgrades to our sales and provisioning tools being deployed, all of which are expected to significantly improve the processes around engagement with potential new customers.

Alongside these investments being made to assist future revenue growth, and as previously indicated within the Interim Results Statement, careful cost control means that operating expenses and therefore EBITDA losses are expected to be slightly lower than previous guidance(3).

CASH

The Group's gross cash balance was £5m at the period-end which, after deducting drawn debt of £2.3m, provides net cash of £2.7m. During the year, the Group received £1.05m in R&D tax credit and expects to receive at least a similar amount in 2022. 

OUTLOOK

The Board confirms that revenue performance for the financial year to 31 December 2021 at £13.6m is in line with current guidance and that, as previously stated within the Interim Results, it continues to expect that the overall EBITDA loss for the financial year to 31 December 2021 will be slightly lower than previous guidance.(3)

In order to successfully execute its' strategy and meet the Board's ambition of achieving monthly EBITDA breakeven by mid-2023, as set out in the reasons for the recommendation by the board of directors of the offer from Xplorer Capital, were the offer not to be implemented the Group would require significant further capital through a combination of new equity capital and increasing and extending its debt facility in the coming months.

Simon Cleaver, CEO, commented:

 "2021 marked a return to growth following a COVID-impacted 2020. I was delighted to see strong performances from new business sales, existing business upsell, and customer retention combine to drive our annualised revenue growth back over 25% as we enter 2022.

Whilst our team have delivered well in 2021 and I'm immensely proud of what they've achieved, I'm also conscious that we are operating in a marketplace where many of our key competitors are materially larger and better capitalised than we are.

In the coming few months, if we remain as a listed company, we will need to raise significant further capital to fund the group through to our targeted monthly EBITDA breakeven in 2023.

I remain passionate about CloudCall and our team, but, given the conflicting sentiment between shareholders that prefer growth vs those that prefer us to push for break-even, I believe a future capital raise from the public markets may be challenging. In addition to this, the quantum of any fundraise will not go far to redress this imbalance between us and certain of our competition.

Against this background and after careful consideration, as noted in the announcement of the offer by Xplorer Capital, the CloudCall Board have determined that the offer by Xplorer Capital is in the best interests of CloudCall shareholders and staff."

(3) This statement, first made in the interim results announcement of 14 September 2021 and repeated in the scheme document on 15 December, constitutes a profit forecast for the purposes of Rule 28 of the Takeover Code which remains valid as of today's date. Part 8 of the scheme document published in connection with the offer from Xplorer Capital contains a directors' confirmation of the basis on which such forecast has been prepared as required by Rule 28 of the Takeover Code. As noted above, a copy of the scheme document can be found on CloudCall's website at:

https://www.cloudcall.com/investor/offer-for-cloudcall

For further information, please contact:

The information contained within this announcement is deemed to constitute inside information as stipulated under the Market Abuse Regulation (EU) No 596/2014. Upon the publication of this announcement, this inside information is now considered to be in the public domain.

About CloudCall Group Plc

CloudCall is a software and integrated communications business that has developed and provides a suite of cloud-based software and communications products and services. CloudCall's products and services are aimed at enabling organisations to leverage their customer data to enable more effective communications and improve performance.

The CloudCall suite of software products allows companies to fully integrate telephony, messaging and contact centre capabilities into their existing CRM software, enabling communications to be made, recorded, logged and categorised from within the CRM system with detailed activity reporting and powerful business intelligence capable of being easily generated.