Cerillion new deal demonstrates success going forward (LON:CER)

Cerillion plc (LON:CER) Chief Executive Officer Louis Hall caught up with DirectorsTalk to discuss the new large deal with an existing customer, exposure to the turbulence in the banking sector and how the deal underpins current forecasts and strong growth.

Q1: Louis, this seems to be a large deal for an existing, long-standing customer. Can you just explain how this is possible?

A1: I think this deal just demonstrates how important our existing customer base is and how important that is in terms of our success going forward.

What we’re seeing here really is a customer that has been a Cerillion customer for quite a long time, first of all doing a major upgrade to move to our latest platform version but also signing up for a long-term deal to engage with our Evergreen model.

Evergreen is the subscription model enables us to keep software up to date for customers on an ongoing basis, hence avoid these quite large upgrades on a more irregular period.

So, that’s something which is important in terms of developing the customer base as we go forward.

Also, this deal includes an additional module, so this customer has signed up for an additional new module that they don’t already have so there’s a licence element there. Because this customer is growing quite substantially, there is also a licenced unit scope expansion as part of this deal as well.

So, it is indeed interesting that existing customers can have such a diverse ongoing needs and I think that’s an important part of our business model.

Q2: Just thinking about the recent turbulence in the banking sector, does Cerillion have any exposure here?

A2: We really have no exposure at all in terms of any deposits with SVB or any of the other banks that we affected. Of course, we don’t have any debt, we have a strong balance sheet and had a last quarter cash balance at FY22 year-end of £20 million.

So, we have no exposure in that regard.

Q3: The deal itself must be helpful in terms of underpinning current forecasts and another year of strong growth?

A3: Yes, I think clearly this does help that quite a lot of this revenue from this new deal will get recognised in our financial year, and I think we are looking good in terms of ongoing progress around the new growth level we’ve established over the last couple of years. So, we’d expect those to continue.

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