Cerillion plc – Profits jump driven by software revenues says Liberum analyst (LON:CER)

Cerillion plc (LON:CER) is the topic of conversation when we caught up with Ciaran Donnelly, Equity Research Analyst, Technology & Media at Liberum to discuss Cerillion’s annual results for the 12 months ended 30 September 2021.

Q1: What are the key highlights from the latest results?

A1: It was a very strong set of results with an acceleration in revenue growth, as Cerillion has won contracts with larger customers who have more complex requirements and greater need for more product. Similarly, profitability has increased to c.40% adj. EBITDA margin, a significant increase year on year.

The company reported record orders, backlog and pipeline which shows the high level of demand for its products.

Q2: What’s driven the significant improvement in profitability?

A2: The significant increase in profitability, as previously mentioned was one of the highlights of the results. This increase has predominantly been driven by an increase in shift towards software revenues, including SaaS revenues. These are higher margin and therefore have increased the company’s overall profitability.  

Q3: How do you see the overall landscape for Cerillion’s products?

Demand for BSS/OSS systems has fundamentally shifted post Covid as telecom operators upgrade their systems to ensure they are prepared for hybrid working environments and the additional demand on telecom infrastructure. Demand for their product suite is driven by industry changes such as 5G, virtualisation, increased security concerns and greater digitalisation. The trend of newer entrants such as MVNOs, cable operators, utility companies and media companies that are offering telecom and  media services that require BSS systems has continued. Cerillion’s high quality product suite and deep vertical expertise is leading to larger contract wins, which supports continued growth.

Cerillion plc (LON:CER) is a leading provider of billing, charging and customer management systems with more than 20 years’ experience delivering its solutions across a broad range of industries including the telecommunications, finance, utilities and transportation sectors.

It has established a reputation within the global telecoms market for being a leading supplier of carrier-grade, enterprise billing and CRM software, supporting fixed wire, mobile, broadband and TV communications service providers.

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