LOOP.L Regulatory News (LOOP)

14 September 2023

LOOPUP GROUP PLC("LoopUp" or the "Group")

Interim results for the period ended 30 June 2023

Continued strong traction in Cloud Telephony

LoopUp Group plc (AIM: LOOP), the cloud platform for premium hybrid communications, is pleased to announce its unaudited interim results for the six months ended 30 June 2023 ("H1-23").

Financial Highlights:

· Improved key financial metrics year-on-year

· Extension of senior debt facilities with Bank of Ireland by twelve months to 30 September 2024

· Reduction of outstanding Bank of Ireland debt to £6.0 million (31 Dec 2022: £6.8m) following scheduled repayment of £0.85 million in June 2023

Operating Highlights:

· Cloud Telephony - Our primary focus - securing customers and strong pipeline building:

- LoopUp was certified onto Microsoft's Operator Connect partner program, and now has Cloud Telephony service availability in 54 countries, the broadest geographic coverage amongst all c.70 partners in the Operator Connect program globally

- 118% growth in customers from 50 at end H1-22 to 109 at end H1-23

- 176% growth in contracts from 102 contracts at end H1-22 to 282 at end H1-23

- 154% growth in Booked ARR3 from £1.0 million at end H1-22 to £2.5 million at end H1-23

- Zero gross churn in FY-22 and Net Revenue Retention (NRR)4 of 155%

· Meetings and Virtual Events ("Event"):

- Material increase in H1-23 Meetings and Event revenue to c.£9.4 million (H1-22: c.£3.6 million), driven by the transition of PGi Connect customers in October 2022

- However, as expected and previously guided, these lines of business are in progressive structural decline, as shown in the following quarterly revenue profile:

Post Period Highlights:

· Cloud Telephony Booked ARR currently at c.£2.7 million, an increase of 70% from £1.6 million at the end of FY22, and a year-on-year increase of 145% from £1.1 million in August 2022

· Strong pipeline of future Cloud Telephony sales opportunities (c.£100 million ARR)

Outlook:

· Based on current year-to-date trading, the positive trajectory in Cloud Telephony and the as expected declining trajectory in Meetings and Event, the Group is confident of broadly meeting current market expectations for FY-23.

Steve Flavell and Michael Hughes, co-CEOs of LoopUp Group, commented:

"Today we report results demonstrating improved financials year-on-year, boosted by the cash generation associated with last year's PGi Connect transaction. We are pleased with the continued strong commercial traction in our primary Cloud Telephony business, executing on our strategy of enabling multinational enterprises to consolidate their telephony procurement and management globally.

Cloud Telephony has seen triple digit growth in both customers and booked ARR, and we are proud to offer the broadest geographic licensed coverage on Microsoft's Operator Connect program. Combined with our global technology platform and team expertise across telecommunications, unified communications and software development, we are well placed with a building pipeline to become a future winner in the multinational segment of the $31 billion5 Cloud Telephony market opportunity."

Market abuse regulation:

This announcement contains inside information for the purposes of Article 7 of Regulation (EU) No 596/2014 as it forms part of UK domestic law by virtue of the European Union (Withdrawal) Act 2018.

About LoopUp Group plc

LoopUp (LSE AIM: LOOP) is a cloud platform for premium hybrid communications. The Group's flagship Cloud Telephony solution for Microsoft Teams enables multinational enterprises to consolidate their global telephony provision into a single, consistently managed cloud implementation rather than disparate implementations from multiple carriers. The Group is listed on the AIM market of the London Stock Exchange and is headquartered in London, with offices in the US, Spain, Germany, Hong Kong, Barbados and Australia. For further information, please visit: www.loopup.com.

Chief Executive Officers' Business Review

Continued execution on our strategic transition

Boosted by the material additional cash generation in our Meetings and Event businesses following the PGi Connect transaction, as announced in September 2022, the Group has continued to forge further strong commercial progress in our primary Cloud Telephony growth business.

At a Group level, all key financials improved year-on-year, with H1-23 revenue 84% higher than the prior year, gross profit 109% higher, gross margin 9 percentage points better, profitable at an adjusted EBITDA level, and an 81% reduction in operating loss.

Our primary Cloud Telephony growth business continued its strong growth profile since launch in H2-20, with triple digit growth in customers, contracts, Booked ARR and revenue, and very strong churn and retention metrics. Our strategy of enabling multinational enterprises to consolidate their telephony procurement and management globally has been strengthened by the Group's leading global coverage on Microsoft's Operator Connect cloud telephony partner program.

Revenue from our Meetings and Event business was 160% higher in the period than prior year due to the PGi Connect transaction, but as expected, continues to decline due to the global trend of these capabilities being fulfilled by broader Unified Communications platforms, such as Microsoft Teams and Zoom.

Strong commercial momentum in Cloud Telephony

The Group's flagship Cloud Telephony solution is integrated into Microsoft Teams and enables users to make phone calls to external phone numbers and receive phone calls to their own work phone numbers, all seamlessly via their Teams-enabled devices. Our platform targets multinational mid-market and enterprise organisations with the value proposition of consolidating their global telephony procurement with one vendor partner - LoopUp - rather than from multiple geographic-specific carriers.

Cloud Telephony now sits squarely at the heart of the Group's forward-looking growth strategy, and we achieved further strong operational progress and commercial traction during H1-23.

LoopUp was certified onto Microsoft's Operator Connect partner program in April 2023. Importantly for our multinational go-to-market strategy, our service availability in 54 countries is the broadest geographic coverage amongst all c.70 partners in the Operator Connect program globally.

Customer numbers grew by 118%, a growth of 59 customers from the 50 at the end of H1-22 to 109 at the end of H1-23.

Given the geographic rollouts generally associated with multinational customer deployments, customer wins often comprise multiple individual contracts over time. Individual contract numbers grew from the 102 contracts with the Group's 50 customers at the end of H1-22 to 282 with the Group's 109 customers at the end of H1-23, a growth of 180 contracts or 176%.

Booked ARR from these 180 customers stood at £2.5 million at the end of H1-23, a 154% increase from £1.0 million at the end of H1-22. This represents the minimum contractually guaranteed level of won ARR, and the Group realistically expects the ARR from these 109 customers to progress to c.£3.9 million as rollouts progress, materially above the minimum contracted level.

Nearly all of the Group's Cloud Telephony customers are on 3-year initial term licence contracts. To date, the Group is proud to have experienced zero gross customer churn since entering the market and very strong Net Revenue Retention (NRR). NRR was 155% in the twelve months to end H1-23, this being the ratio of booked ARR at the end of H1-23 to booked ARR at the end of H1-22 from the cohort of 50 customers in place at the end of H1-22.

The Group maintains a strong pipeline of future Cloud Telephony sales opportunities (c.£100 million ARR). We are confident in our continued Cloud Telephony growth prospects and are excited by the traction and potential of our differentiated multinational solution in this large Cloud Telephony market, which is forecast to grow from £21.2 billion in 2022 to £31.4 billion by 20276.

Meetings and Event

The Group's Meetings and Event businesses remain structurally in decline, primarily due to customers switching to broader Unified Communications platforms such as Microsoft Teams that include similar features and capabilities.

However, our Meetings and Event businesses received a substantial boost in September 2022, when the Group announced a 'Revenue Sharing and Customer Transfer Agreement' with PGi Connect. The agreement gave LoopUp the rights to onboard materially all of PGi Connect's conferencing services customers. While no initial or fixed consideration was payable, the Group agreed to pay PGi Connect a share of invoiced and received revenue7 from successfully transferred customers for a period of three years.

Meetings and Event revenue was c.£9.3 million in H1-23, an increase of 160% over c.£3.6 million in H2-22. However, the underlying structural decline is demonstrated in the quarterly revenue profile as below:

Recent churn was amplified by a major collections initiative beginning in Q2 across the thousands of new accounts transitioned from PGi Connect, and the Group believes this churn rate will settle at a lesser but nevertheless still material level in due course.

Notwithstanding the structural decline, Meetings and Event are highly cash generative for the Group.

Hybridium

Following the acquisition of SyncRTC Inc. in October 2021, the Group's Hybridium (www.hybridium.com) solution is focused on relatively large-scale corporate events that have a mix of in-room and remote guests and/or a mix of in-room and remote hosts/presenters, such as management onsites, departmental kick-offs, capital markets days and thought leadership seminars.

Events with Hybridium's video wall technology benefit from ultra-low latency at ultra-high resolution, with full video wall layout flexibility facilitating any content on any section of the wall. The Group is currently reviewing its go-to-market strategy for Hybridium and will make further market announcements in due course.

Bank of Ireland debt arrangements

In June 2023, the Group successfully extended its debt facilities with Bank of Ireland by twelve months, such that the facilities will now mature on 30 September 2024. The financial covenants to this facility were extended through to the updated maturity date, on the same essential basis as prior to the extension. There were no material changes to key commercial terms in connection with the facility.

Outlook

While the Directors expect the Group's Meetings business to continue to decline over time, this is now from a materially larger base following the transition of former PGi Connect customers. Combined with the fast and accelerating growth in its primary forward-looking Cloud Telephony business, the Group is confident of broadly meeting current market expectations for FY-23.

Steve Flavell Michael Hughes

co-CEO co-CEO

Unaudited consolidated statement of comprehensive income for the six months to 30 June 2023

Unaudited consolidated statement of financial position at 30 June 2023

Unaudited consolidated statement of changes in equity at 30 June 2023

Unaudited consolidated statement of cash flows for the six months to 30 June 2023

Notes to the financial information for the six months ended 30 June 2023

1. General information

LoopUp Group plc (AIM: "LOOP", "LoopUp Group", or the "Group") is a global provider of hybrid communication software and services. It is a public limited company incorporated and domiciled in England and Wales, with company number 09980752. Its registered office is 9 Appold Street, London EC2A 2AP.

2. Basis of preparation and significant accounting policies

These consolidated interim financial statements have been prepared in accordance with UK adopted International Accounting Standards ("IFRS") and IFRS Interpretations Committee (formerly IFRIC) interpretations in accordance with international accounting standards in conformity with the requirements of the Companies Act 2006. This results announcement does not constitute statutory accounts of the Group within the meaning of sections 434(3) and 435(3) of the Companies Act 2006. The balance sheet at 31 December 2022 has been derived from the full Group accounts published in the Annual Report and Accounts 2022, which has been delivered to the Registrar of Companies and on which the report of the independent auditors was unqualified and did not contain a statement under either section 498(2) or section 498(3) of the Companies Act 2006.

The results have been prepared in accordance with the accounting policies set out in the Group's 31 December 2022 statutory accounts, which are based on the recognition and measurement principles of IFRS.

These unaudited interim results have been prepared on the going concern basis. At the balance sheet date, the Group had cash of £0.9m and net assets of £32.5m. Based on detailed forecasts prepared by management, the Directors have a reasonable expectation that the Group has adequate resources to continue operations for the next twelve months, and as such these results have been prepared on a going concern basis.

The results for the six months ended 30 June 2023 were approved by the Board on 13 September 2023. A copy of these interim results will be available on the Group's web site www.loopup.com from 14 September 2023.

The principal risks and uncertainties faced by the Group have not changed from those set out in the Annual Report and Accounts 2022.

No impact is anticipated from new standards coming into effect from 1 January 2023.

3. Revenue and segmental reporting

IFRS 8 Operating Segments requires operating segments to be identified on the same basis as is used internally for the review of performance and allocation of resources by the CODM. The Directors have identified the segments by reference to the principal groups of services offered and the geographical organisation of the business as reported to the CODM.

The primary segment is that of LoopUp Platform Capabilities (LPC), and includes global cloud voice services via Direct Routing and Operator Connect integration with Microsoft Teams (known as Cloud Telephony), as well as the Group's longstanding Remote Meetings and Managed Events capabilities. Revenue from resale of Cisco WebEx services is categorised as 'third party resale services'. A third segment exists as a result of the acquisition of SyncRTC in October 2021, that of Hybridium.

Segmental revenues are external and there are no material transactions between segments. The Group's largest customer represented less than 5% of total revenue in both years.

No segmental balance sheet was presented to the CODM. It is not possible to allocate overheads, and therefore profits, by segment due to the pooled nature of the overhead base and the capital structure. Overheads are not presented to the CODM on a segmental basis.

The Group's revenue disaggregated by primary geographical markets is as follows:

The Group's revenue disaggregated by pattern of revenue recognition is as follows:

The Group's revenue disaggregated by segment is as follows:

The Group's non-current assets disaggregated by primary geographical markets are as follows:

4. Earnings per share

The basic earnings per share is calculated by dividing the net profit attributable to equity holders of the Group by the weighted average number of ordinary shares in issue during the year. 

Since the Group made a loss in each of the periods above, there were no potentially dilutive shares that were not anti-dilutive, and the diluted earnings per share is identical to the basic earnings per share.

5. Dividends

The directors did not recommend the payment of a dividend for the years ended 31 December 2022 or 2021, or the six month periods ended 30 June 2023 or 2022.