Business & Investment

Small cap idea: Cloudcall Group looks bargain because the CRM market is booming

CloudCall Group PLC CEO Simon Cleaver may be forgiven for suggesting that his business has been overlooked and undervalued by an audience of British investors.

It is a software as a service (SaaS) with a 94% recurring revenue base and a recurring revenue base, and is expected to grow at an annual rate of about 25%.

Still, with just twice the sales, CloudCall has a reputation that looks like a bargain in the tech-savvy US market.

American investors like SaaS. It’s not because they prefer to pay significantly over odds, but because they understand how these businesses work.

They know that they are very sticky and have a high gross margin (75% or more) with a near-pension level customer base.

True Knowledge: American investors who prefer SaaS do not prefer to pay significantly more than odds, but because they understand how these businesses work.

And that’s why they pay a premium: long-term visibility into a sustainable and ultimately highly profitable revenue stream.

The question for Stateside is “How big can we grow before the runway runs out?”

For Salesforce, are Workday and Adobe pretty big issues? The follow-up is “How long do you need to get there?”

Here in the UK, conversations with investors, and I personally knew this short-sighted thing, tend to follow the line “when do you reach the break-even point?” Oh, and don’t come back to us for any more cash until you do. “

Anyway, yell and move on.

CloudCall specializes in integrating communication systems (telephony and messaging) with customer relationship management systems such as, but not limited to, Salesforce mentioned above.

This allows enterprises to log and analyze incoming and outgoing communications routed through CRM.

As CloudCall CEO Cleaver states, CRM is the “single source of truth” for most organizations.

What do you mean? Well, it can provide transparency about how business development and customer support work. And, when properly interpreted, good CRM helps companies make the way they do business much more efficiently.

But here it is. As anyone who bought such a system says, once in, it’s almost impossible to remove it.

These products are hellishly sticky. That’s why Salesforce, Adobe, Workday, and more are today’s tech giants.

Instead of paying a lip service to CRM, as most large communication groups tend to, CloudCall is devoted to it.

With CRM at its core, we ensure that the solution integrates seamlessly with customer-installed systems, whether it’s a hotel CRM or a system for the recruitment department, which is CloudCall’s specialty.

With approximately 1,600 customers today, CloudCall generated £ 6.4m in revenue in the middle of the year and has an annual run rate of £ 13.4m, which is equivalent to approximately 20% growth.

Of course, the eye-catching number is the 94% repetitive and repetitive business generated by CloudCall.

The £ 6m fundraising activity in March exceeded the Group’s financial resources by up to £ 8.4m in the interim phase of 2021, with an additional £ 1m from R & D tax credits and an additional £ 2m through existing debt facilities. Was available.

The company reported in the latest information that increasing the number of CRMs that can be integrated will double the market available.

In addition to this, a strong recovery in the recruitment market should underpin growth expectations.

After the bumps of 2020, the group expects to return to the rapid expansion it saw before the pandemic, with recurring revenues increasing by about 25% each year. We also promise to reach the break-even point at the EBITDA level in mid-2023.

It is no exaggeration to say that stock prices have been hit a bit since the beginning of this year. I don’t know if this is investor myopia or a company failure as mentioned above.

What it looks like has left an anomaly in the assessment.

Canaccord Genuity says it very frankly. Sales are only 1.8 times higher, and stock prices are too low as visibility into the accelerating growth trajectory increases. The stock price is calculated to be 115p, or about twice the current price.

Since Canaccord is a CloudCall broker, the cynic probably responds as follows:

This is a quote from Sure Swift Capital, a non-interested party. This is an American company that supports the sale of software companies as a service.

“For small, boot-strapped SaaS businesses (profitable and growing), valuation multiples tend to range from 3 to 5 times. [sales], “It says.

Do the words “overlooked” and “underestimated” ring the bell?

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Small cap idea: Cloudcall Group looks bargain because the CRM market is booming Small cap idea: Cloudcall Group looks bargain because the CRM market is booming

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