IMImobile PLC (LON:IMO), a cloud communications software and solutions provider, announced the following update yesterday ahead of its preliminary results for the year ended 31 March 2017.
Financial and Operational Highlights
· Group trading slightly ahead of market expectations with strong trading momentum and organic growth in all regions and business units
– Revenue and gross profit increased by c23% and c18% respectively.
– Strong cash conversion with £14.7m gross cash at year end.
– Double digit organic gross profit growth in Europe & the Americas and very strong gross profit growth from India & South East Asia (“SEA”).
· Significant momentum with new contract wins, renewals and upsell into existing client base
– Largest customer contract renewed on revised terms until FY19 in Middle East and Africa (“MEA”).
– Global Framework Agreement signed with Telenor Group.
· Good progress on partnership strategy with first customer win with BT Group.
· Further successful M&A
– Completion of Infracast acquisition to consolidate position in the financial services sector in the UK.
– Good progress with Archer in South Africa with trading in line with expectations.
Europe & Americas
Double digit organic gross profit growth in the region came from a combination of further penetration into existing accounts and several new contract wins during the year. There were new deployments in the region across mobile operator, utilities, logistics, retail and gambling and gaming verticals. These, largely recurring revenue contract wins will, as they are deployed, support growth in the coming year.
Continued investment in product, sales and marketing and a developing partnership strategy during the period has led to a strong pipeline of opportunities for IMIconnect, IMIchat, IMIcampaign and Textlocal.
The acquisition of Infracast in March 2017 gives the Group a dominant position in the financial services sector with a significant market share of all digital messaging to customers of UK banks.
MEA
The operator business in MEA grew strongly in volumes however headwinds from currency movements and a major contract renewal limited overall organic growth to low single digits. Archer, which was acquired in September 2015, is trading as expected, with cross sell opportunities identified with Archer’s banking clients. In spite of recent political and currency volatility the Group remains confident of significant long term growth in the region.
India & SEA
The region has seen very strong growth during the period from the mobile operator, enterprise and Textlocal business units. A combination of new contracts and growth from existing deployments are the driving factors.
New contract wins, including an Indian state government and a global framework agreement with the Telenor Group are expected to provide firm foundations for further growth over the next few years.
Strong cash position
The Infracast acquisition was completed during the period for an initial consideration of £8.2m comprising cash outflow of £7.7m (£7.4m net of excess cash acquired), which was funded from existing cash resources. With more than 100% conversion of EBITDA to cash from operations, the Group’s gross cash position at 31 March 2017 was £14.7m. Of this cash position £4.7m is held in Nigerian Naira and the Company continues to actively review how this is best utilised.
The Board remains focused on delivering long term shareholder value and will continue to review the use of cash to ensure there is an appropriate balance between retaining flexibility for further M&A in a fragmented market, investment in the business and enhancing shareholder returns through on market share buybacks.
Jay Patel, Chief Executive of IMImobile PLC, commented: The Group enters the new financial year in a strong position, underpinning its ability to drive further growth in the period ahead. We have a strong pipeline of opportunities and active deployments which provides solid foundations to build upon.
We are confident that our continued investment in our product suite, an active partnership strategy and integration of acquisitions can further amplify the Group’s organic growth, whilst being well placed to take advantage of consolidation opportunities across the industry with our continued cash generation and strong balance sheet.
