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Time is right for LoopUp’s remote meetings revolution
Now with the MeetingZone acquisition bolted on, remote meetings platform LoopUp (LOOP:AIM) has the scale to really make the most of what we believe is a significant growth opportunity. Revenue is expected to jump by 80%-plus over the next couple of years (from this year’s anticipated total of around £34m).
This should translate into soaring earnings that will effectively slash the price to earnings (PE) multiple to below 20, on a 2020 financial year view, from this year’s 60-plus rating.
LoopUp’s patented and cloud-based remote meetings software is designed to drag audio conferencing into the 21st Century. LoopUp’s key advantage is a streamlined service for both hosts and participants that not only works well but is intuitive and easy to use.
That makes its package attractive for corporate users versus rival services from deep pocketed rivals, such as Microsoft’s Skype for Business, Amazon Chime, Google Hangouts, AT&T plus more recent start-ups, such as GoToMeeting, JoinMe and the UK’s Powwownow.
LoopUp had in excess of 2,000 customers before it bought MeetingZone in a £61.4m deal earlier this year, and it is in the process of bringing on board those new clients to the core LoopUp platform.
IMPRESSIVE RETURN ON INVESTMENT
One of the most exciting data points is that for every £1.00 of one-off investment in its sales and distribution it reaps 75p back a year. Every year. Churn, the measure of customers leaving the service, is negligible and is entirely offset by upselling into existing clients.
Established operations in the UK and US are now being rapidly expanded via its local sales teams, or Pods. These are semi-autonomous units geared to hit ambitious growth targets, and incentivised as such.
Two of the nine Pods it currently runs were virtual start-ups that will take a few months to get up to speed. That explains while first half (to 30 June) organic revenue growth of 22% looked slow compared to previous periods.
And LoopUp hopes to use its now set-up Australia Pods as a launchpad into Asia in the future.
With revenues almost exclusively of a reliable, software-as-a-service, recurring nature, the company has a firm grip on future revenues. It also means that the LoopUp business model is naturally cash generative. More than 70% of earnings before interest, tax, depreciation and amortisation (EBITDA), adjusted for one-offs, are converted into operating cash flow. We would expect that percentage to improve further in time.
The stock has previously hit highs of 500p, after joining the market at 100p in August 2016, but analysts predict even better to come. The two brokers that cover the stock (Panmure Gordon and Numis) see the share price hitting 590p or 600p over the next 12 months or so, implying more than 50% upside. (SF)