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Eckoh reaffirms momentum after strong first half trading

Snapshot

  • Develops secure payments technology
  • Processes around £800mln in card payments every year
  • Offers customer service solutions
Online payment

Quick facts: Eckoh PLC

Price: 66 GBX

AIM:ECK
Market: AIM
Market Cap: £167.55 m
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What Eckoh does

Eckoh PLC (LON:ECK) provides secure payments and customer contact technology, specialising in card-not-present (CNP) transactions.

CNPs are payments usually made either over the phone, online, or through mobile devices without face-to-face contact or verification.

The company processes around £800mln in card payments every year for its customers.

Eckoh also offers customer service solutions that allow client companies to manage their multi-channel customer communications more efficiently.

The firm’s products allow the client’s customers to self-serve (i.e. make enquiries, retrieve information, and make payments) through automated processes, which can help remove burdens from call centres and other advisors, which helps cut down on operational costs and reduce customer enquiry queue.

These products include systems like chatbots, which are loaded with pre-set responses to queries, as well as social media management that can track comments made about companies online across platforms like Facebook and Twitter.

How it's doing

In the first half of the current year, Eckoh enjoyed significant commercial traction in the US, where revenues doubled and it landed a deal with an unnamed Fortune 100 retailer.

For the group as a whole, turnover was ahead 37% at £18mln in the six months ended September 30, giving a three-fold lift to operating profit, which was £3.4mln.

Total business was up 15% to a record £19.4mln, while deferred income, a proxy measure for new business wins, also advanced.

The company ended September with net cash of almost £11mln.

Interview - CEO Nick Philpot

What the broker thinks

Cannacord thinks Eckoh is well-placed to take a further share of the US secure payments solutions market for contact centres.

"Eckoh has so far won several 10's of customers, which implies that the US is a multi-year growth opportunity for the company," the broker said.

It expects a compound annual growth rate (CAGR) in US secure payment revenue of 35% for fiscal years 2019 to 2022, putting Eckoh "on a path to double-digit group top-line growth in 2020 and high single digits beyond".

Coupled with an estimated margin rise of 150 basis points, the broker's new estimates imply a 26% CAGR in adjusted earnings (EBIT) for 2019-22. 

"Should management achieve its long-term goal of growing US revenues to the same level as its UK business by 2022, we see scope for earnings per share upgrades and long-term upside potential for the shares to 80p," Cannacord said. 

Inflexion points

  • More growth in the US 
  • Momentum builds as size of customers grows
  • Payments sector is consolidating with big deals 

 

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Watch

Eckoh PLC sees new business growth hit record levels

Eckoh PLC's (LON:ECK) Nik Philpot caught up with Proactive London's Andrew Scott to talk through their results for the year to March 2019. Pre-tax profit rose to £1.2mln in the period from £1.1mln last year with revenue up 5% to £28.7mln. Total business sales jumped 62% to £32.7mln...

on 14/6/19

3 min read