Cerillion Q&A: Larger telecom deals, managed services and long-term relationships key to recurring revenue growth (LON:CER)

Cerillion plc (LON:CER) Chief Executive Officer Louis Hall caught up with DirectorsTalk for an exclusive interview to discuss market factor favouring strong sales growth, what’s driving the increased percentage in the recurring revenue mix and the outlook for the company going forward.

Q1: What market factors are favouring the strong sales growth that Cerillion is currently experiencing?

A1: I think that the big driver for us is the shift towards software as a service and telco’s accepting that standard products are the way forward rather than heavily customised bespoke solutions. Our key USP in this market is that we provide a product solution, it works out of the box on day one, and whilst it can be configured to do whatever the telco needs, it is technically the same software product that every telco customer of ours is using.

Q2: What’s driving the increased percentage of recurring revenue in your sales mix?

A2: I think that’s two things. One is that we are signing larger deals with larger customers and larger customers have bigger licenses, bigger licenses have bigger recurring license fees but also bigger recurring support and maintenance elements.

Also, larger customers tend to be more interested in the service wrapper around that software provision so by this, we mean the software operations and management functions that we also provide to customers, which are adding of course to recurring.

Q3: Finally, how would you view the outlook for the rest of the year and perhaps beyond for Cerillion?

A3: I think we’re very well positioned, we did slightly more new orders in the first half of our financial ’21 and the whole of financial ’20. Backlog is up by 74%, compared to the same period last year, and we have a strong pipeline, which is also growing.

So, I think we’re very well positioned to achieve our FY21 market expectations and I think we’re looking very well positioned for the ‘22 as well, based on current backlog and pipeline.

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