Cerillion CEO on much stronger visibility going forward (LON:CER)

Cerillion plc (LON:CER) Chief Executive Officer Louis Hall caught up with Liberum to discuss what the company does, how its offering differentiates from its competitors, key growth drivers and what investors should know about the company.

Q1: Can you provide a brief overview of what Cerillion does?

A1: We provide the enterprise software that sits between telecoms companies networks and their customers. So, if you think of it as a software that enables telcos to create the products they’re going to sell to their customers so typically these days they’re bundles of mobile, fixed broadband, TV products, TV services.

The software enables those telcos to sell those services through their CRM channels, through self-service where customers are buying their own services online through mobile apps and so on. The software then enables telcos to monitor use of those serviceable networks so for example, are customers within their data balances? Are they allowed to make a mobile phone call if it’s a pre-paid package for example through to everything like where the cables are in the ground, logically and physically, how is that network managed and controlled and so on. Also, traditional things like billing, payments, collections and so on.

Q2: How is the business offering differentiated versus its competitors?

A2: So, I think you really need to think about the company as a Software as a Service provider of a standard product in a market that has been traditionally been dominated by much more heavily bespoke solutions from our typically much larger competitors.

So, whilst most of the providers in our market will start with some kind of product framework, those frameworks tend to be heavily customised by other vendors whereas we’re offering the same product that every other customer has, it already works out of the box, it works on day one and can be demonstrated immediately, right in front of you.

We take care of everything else so think of it as like using Salesforce, you log on to the platform and you use it, we deal with the hosting, the management of the solution, support and maintenance, the whole nine yards. Our customers then simply use that software in a SaaS mode.

Q3: What are the key growth drivers for the company?

A3: The drivers behind our momentum really are three different areas:

First of all, what we’re seeing is a move to selling a Solution as a Service which I was talking about earlier, that just means that the size of the deals is larger, if we’re selling a 5-year term service then it’s very different to selling a traditional perpetual licence with support and maintenance. So, that obviously includes hosting the solution, managing the solution, operating the solution and supporting the solution and a 5-year term licence which is renewed at the end of each term. So, that’s one factor

The second factor is that as we’re seeing with the big investments in 5G and the rollout of fibre, more broadband, out to premises, there’s a huge amount of investment going on in telecoms at the moment, these are big capital projects, long investment cycles. With those huge investments and infrastructure, we’re seeing telcos look at the ancillary software systems that surround their networks, which enable them to monetise that investment in their networks and get a great return. So, that’s another big factor, just the sheer amount of investment that’s going in telco that’s driving our growth.

On top of that, we’re also seeing a credibility boost in that as we sell bigger deals to bigger customers, the next larger customer finds it easier to do the next bigger deal. So credibility gain, bigger deal gets bigger deal and that obviously helps overall to increase our growth rate, enables us to grow faster.

Q4: What are the key things investors should know about Cerillion?

A4: I think the most important thing to bear in mind is that we’re a business that has gone from a growth rate of around 9%-10% to a new growth trend with a growth rate of around 25%. That’s happened mainly because the market has come round to our view of the world which is that telcos need standard as a service product to fill these needs rather than heavily bespoke individual solutions.

I think that as a service approach as well as playing to what the current market trend is also enables us to have much stronger visibility going forward in terms of future revenues because obviously that model brings much stronger recurring revenues. I think that is a double whammy in terms of boosting growth for the future.

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