Toople PLC (LON: TOOP), a provider of bespoke telecom services to UK SMEs, has today announced interim results for the six months ended 31 March 2019.
Commenting on the results Richard Horsman Toople plc Non-Executive Chairman said:
“We continue to add more customers, typically on two year fixed term contracts. Our growing customer base will result in a lower cost of acquisition per customer and will boost our future outlook. We are now seen as a major disruptor in the SME telecommunications space, and we are being benchmarked against by a major tier one UK carrier. Our competitors find our transparency and fixed price contracts unsettling as this clearly appeals to small businesses. The major incumbents have traditionally used ‘increase in price’ strategies linked to RPI. We offer a product that provides customers with exactly what they need, at a fixed price and are increasingly becoming a natural choice for customers looking for an easy to use, no hidden costs, telecoms service.”
Financial and Operational Highlights:
· Group revenue grew year on year by 57% to £1.08m for the six month period
o 169% revenue growth attributable to our directly contracted SME business
o Broadband revenue grew by 159%
o Cloud telephony revenue grew by 82%
o Mobile revenue grew by 124%
o 7% decline in wholesale revenue – largely expected as we take action to eliminate legacy, low margin revenue
· Gross profit increased by 150% (up 72% on H2 2018)
· Gross margins improved by 7 percentage points over same period last year
· 80% increase in marketing spend (102% higher than H2 2018) reflecting increased level of spending to grow the business, driving significant increase in lead conversion and sales, which will ultimately lead to a lower cost of acquisition per customer
· New Head of Digital and Commercial Marketing appointed focussed on driving growth, innovation and sales
· Major contract win of £3.5m as previously announced performing in line with expectations and the first batches of customers have been transferred over to the Toople billing platform
· New contract wins and partnership agreements continue, validating management decision to increase marketing spend
· Strong current trading including a record month in April 2019 and a healthy new business pipeline, with over 900 orders in the month from over 600 small businesses placing orders with Toople for the first time
· Cash at period end of £1.15 million in-line with expectations and sufficient to allow business to continue with the growth plan outlined at time of Placing completed in September 2018
Commenting on summary and outlook, Andy Hollingworth, CEO at Toople added:
“This has been an excellent six months for the Company. We continue to execute on our growth strategy and are performing well against all our key operational and financial benchmarks. Our cash position as at 31 March 2019 stood at £1.15m and the Board believes that the current cash position is sufficient to allow the business to continue to pursue the marketing strategy outlined at the time of our Placing. The investments we have made in people and digital marketing are paying off. In our direct business we continue to generate an increased level of enquiries from potential customers and our conversion rate remains strong. Additionally, our decision to move away from onerous historic partnership contracts with high debtor risk and low margin, will sacrifice revenue in the short term, but will deliver overall improvement in gross margins and ultimately profitability. Current trading is strong with another record month in April and a healthy new business pipeline, with over 900 orders in the month from over 600 small businesses placing orders with Toople for the first time. We believe we can still grow our customer acquisition rate with the same level of marketing spend and will be able to drive further efficiencies with our marketing and sales performance. We look forwards with confidence.”
