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LoopUp Group PLC (LOOP)

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Wednesday 03 July, 2019

LoopUp Group PLC

Trading Update

RNS Number : 2793E
LoopUp Group PLC
03 July 2019
 

3 July 2019

LOOPUP GROUP PLC

 

("LoopUp Group" or the "Group")

 

Trading Update

LoopUp Group plc (LSE AIM: LOOP), the premium remote meetings company, is providing a trading update for the six months ended 30 June 2019 ("H1 2019").

 

Overview:

·    The Group continues to see strong demand for the LoopUp product. In addition to a £2.34 million contract renewal with leading global law firm, Clifford Chance, new landmark accounts wins during H1 2019 include a major European investment management association, a leading television broadcaster in Australasia, the world's largest private dispute resolution provider, and numerous major international law firms. 

·    However, due to: (a) subdued revenue across its long-term customer base, which the Group believes has been driven primarily by general macro-economic factors rather than any material change in customer loss rate; and (b) more senior quota-carrying pod staff than expected being diverted into management and training activities required to accommodate the dramatic increase in the number of pod staff, the Group now expects revenue and EBITDA for the full year to 31 December 2019 ("FY2019") to be approximately 7% and 20%, respectively, below market consensus.

·    The Group expects revenue in FY2019 to be weighted approximately 48% in H1 2019 and 52% in H2 2019.

·    In June, the Group announced the introduction of differentiated video functionality into its flagship LoopUp product. Based on strong customer feedback, the Group now plans an accelerated roll-out across its customer base during Q3 2019. The Group believes that this advancement in its product expands its addressable market, enhances its value proposition, and offers an additional source of value-added pay-as-you go revenue from its existing customer base.

 

Subdued H1 2019 revenue in the Group's long-term LoopUp customer base:

·    The Group is experiencing year-on-year revenue erosion of approximately 7% in its long-term established LoopUp product customer base, in contrast to net growth of 1% in FY2018.

·    Rather than any material change in the gross revenue loss rate, the cause appears to be rather subdued revenue levels more generally across the long-term base. The Group notes that approximately 70% of LoopUp revenue comes from professional services firms. As such, the Group believes that this subdued revenue is a reflection of more general market uncertainties relating to Brexit and the global macro-economic climate.

Greater management and training required for rapid growth in pod staff:

·    The Group has executed in line with its aggressive recruiting targets to increase the number of trained pod staff dramatically, from 63 at the end of FY2018 to 112 currently.

·    Notwithstanding any further recruiting during the remainder of this year, current pod staff alone have the quota potential for approximate 14 pods once fully ramped into the system, and the Group believes this growth in pod team size will yield material future growth and value.

·    However, this dramatic growth in team size has necessitated more management and training resource than originally expected. As such, certain senior quota-carrying pod members have been taken out of pods to take on this management and training requirement, and this has impacted Group revenue growth in the immediate term.

·    The Group continues to consider its Pod Academy training scheme as a very effective new lever to accelerate pod growth in the medium term. The graduates of the Group's first Pod Academy have now been in pods for five months and have closed 28 new mid-market and enterprise accounts in that limited time. However, given the lead times to roll out and ramp up pay-as-you-go revenue from these accounts, the Group now considers it prudent to work to a 12-month ramp-up profile to full quota, rather than the 8-month ramp-up as previously guided. The Group is currently recruiting for its second Pod Academy intake with a focus on Germany and France.

·    Furthermore, the Group has determined to move just two sales staff from MeetingZone Germany and Sweden into its new business teams.

·    As a net effect, the Group now guides toward an average of 10 ramped and effective pods during FY2019 (previous guidance: 13), increasing to 16 in FY2020 and 22 in 2021.
 

Steve Flavell and Michael Hughes, co-CEOs of LoopUp Group, commented:

"We are experiencing some broad macro-economic headwinds in our business and have needed to take on board some learnings and growing pains resulting from what is essentially a very positive expansion of team size in our new business pods.

However, we believe the LoopUp product remains strong and differentiated in a very large addressable market, we continue to see excellent demand for that product, and we remain confident in our ability to deliver strong future growth."

 

For further information:

 

LoopUp Group PLC

via FTI Consulting, LLP

Steve Flavell, co-CEO

 

 

 

Panmure Gordon (UK) Limited

+44 (0) 20 7886 2500

Dominic Morley / Alina Vaskina (Corporate Finance)

 

Erik Anderson (Corporate Broking)

 

 

 

Numis Securities Limited 

 

Simon Willis / Jonny Abbott (Corporate Finance)

+44 (0) 20 7260 1000

Tom Ballard (Corporate Broking)

 

 

 

FTI Consulting, LLP         

+44 (0) 20 3727 1000

Matt Dixon / Harry Staight

 

 

 

About LoopUp Group plc

 

LoopUp (LSE AIM: LOOP) is a premium remote meetings solution. Streamlined and intuitive, LoopUp is built to give mainstream business professionals a better and more productive experience than basic dial-in conferencing, while delivering the quality, security and reliability required in the enterprise. One-click screen sharing and integration with tools business people use every day, like Outlook™, make it easy for LoopUp users to collaborate in real time. LoopUp's award-winning SaaS solution doesn't overwhelm users with features and doesn't require training. Over 2,000 enterprises worldwide, including Travelex, Kia Motors America, Planet Hollywood, National Geographic and Clifford Chance trust LoopUp with their remote meetings.

 

The Group is headquartered in London, with offices in San Francisco, New York, Boston, Chicago, Dallas, Los Angeles, Atlanta, Denver, Cardiff, Milton Keynes, Madrid, Berlin, Malmo, Hong Kong, Sydney and Barbados, and is listed on the AIM market of the London Stock Exchange (LOOP). For further information, please visit: www.loopup.com.


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