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As we are halfway through the year, the Office for National Statistics released the UK GDP data; the FTSE-100 was trading at 6,161.89 (as on 30th June 2020, before the market close at 2.08 PM GMT+1).
Meanwhile, the following factors can also affect the markets today:
- As per the data released by Office for National Statistics, the UK GDP shrank by 2.2% for January to March quarter.
- The services output and household consumption declined by 1.9% and 1.7%, respectively, for January to March quarter.
- The UK Finance Ministry stated that it had spent close to GBP 25 billion to support 9.3 million jobs under the coronavirus job retention scheme.
- As per the industry experts, there is a high probability that the UK will enter a no trade-deal Brexit.
Given the above market conditions, we will discuss two stocks - Bigblu Broadband PLC (LON:BBB) and CloudCall Group PLC (LON:CALL). As on 30th June 2020, (before the market close at 1.43 PM GMT+1), both BBB and CALL were down by approximately 2.04% and 2.10%, respectively, against the previous day closing price. Let's read through their operational and financial updates.
Bigblu Broadband PLC (LON:BBB) – Growth opportunity lies in increasing customer base
Bigblu Broadband PLC is a provider of broadband service to homes and businesses in the UK, Europe, and Australia. Bigblu operates brands such as Quickline in the UK and Skymesh in Australia. The Company was listed on the London Stock Exchange (LSE) in the year 2015, and it is included in FTSE AIM All-Share.
Annual result FY2019 (year ended 30th November 2019) as reported on 26th March 2020
The total revenue increased by 12% year on year to GBP 62.1 million. The average revenue per user (ARPU) was GBP 43.8 per month. The adjusted EBITDA and profit after tax (excluding IFRS 16) was GBP 10.2 million and GBP 4.7 million, respectively. The free cash outflow was GBP 3.9 million as the Company made a capital investment of GBP 8.9 million. Bigblu generated revenue of GBP 19.1 million in the UK, GBP 28.0 million in Europe and GBP 14.8 million in Australia. In 2019 the Company launched 50-Mbps satellite products in Europe.
The net debt of the Company was GBP 14.2 million. The Company secured revolving credit facility of GBP 30 million from Santander Bank to replace the existing loan facility of GBP 12 million. It also has an existing credit facility of GBP 4 million from HSBC bank.
The Company had a total of 110,000 customers after the net addition of 10,000 customers in FY19. The customer churn rate, excluding the rationalized customer, was down to 20.5% from 21.9% a year ago. Bigblu secured funding of GBP 12.0 million for Quickline Holdings to invest in infrastructure projects and to grow the customer base. Quickline, Bigblu's fixed wireless in the UK, has been chosen to lead government-backed rural connectivity project in North Yorkshire, UK.
Bigblu Positioning
(Source: Company Website)
Share Price Performance
1-Year Chart as at June-30-2020, before the market close (Source: EODHD/Others, Thomson Reuters)
Bigblu Broadband PLC’s shares were down by 1.36% to trade at GBX 96.67 per share (as on 30th June 2020, before the market close at 1.40 PM GMT+1). Stock 52 week High and Low were GBX 124.90 and GBX 59.00, respectively. The Company had a market capitalization of GBP 56.44 million.
Business Outlook
The Company launched Eutelsat's Konnect satellite, which will cater to the European market starting activations from October. The connection would provide a speed of 100 Mbps. Going forward, the Company will actively review the acquisition opportunities. The COVID-19 situation may allow the Company to grow the customer base by connecting people through their service. However, the risk remains that revenue growth and sales activities may be slower due to the uncertainty in the situation. The Company believes that it can generate growth from fast satellite services in Europe and rolling-out fixed wireless network across Australia. From 2022 onwards the plan is to offer services with speed in the range of 200-300 Mbps.
CloudCall Group PLC (LON:CALL) – Focus will be to integrate with more CRM platforms
CloudCall Group PLC is a UK based software company that designs, develops, and operates integrated multi-channel communication services for customer relationship management (CRM) systems. The products are used in North America, UK, mainland Europe, Australia and some parts of Asia Pacific region. CloudCall products generate monthly recurring revenue from CRM end-customers. The Company was listed on the London Stock Exchange (LSE) in the year 2006, and it is included in FTSE AIM All-Share.
Annual result for FY19 (period ended 31st December 2019) as reported on 8th April 2020
The Company reported revenue of GBP 11.4 million, which was up by 30% year on year. The recurring revenue from subscription-based services grew by 33% year on year. The average recurring revenue per user (ARPU) was GBP 28 per month. The net operating cash outflow was GBP 1.9 million in the financial year.
North American operations generated revenue of GBP 4.5 million, which was up by 56%. The UK and mainland Europe operations reported revenue of GBP 6.9 million, which grew by 18%. The new operation in the Asia Pacific will generate revenue in FY2020.
- In February 2020, CloudCall won a contract with Vaco to provide integrated telephony service for three years to Vaco's employees. Vaco is a global talent and solution company.
- As on 31st December 2019, the Company had a cash balance of GBP 11.1 million and an undrawn credit facility of close to GBP 1.0 million under the GBP 3.0 million facility with Shawbrook Bank. CloudCall also raised fresh equity of GBP 11.3 million in October 2019.
- As on 31st December 2019, the Company had 42,348 users which increased by 35% year on year. The Company added four new CRM integration in 2019.
Customer base and growth
(Source: Company Website)
Trading update as reported on 1st June 2020
The new sales bookings based on the year to date was down by 28% year on year as prospective customers had put their expenditure on hold. The sales bookings to existing customers for product upgrades were down by 35% year on year. The Company lost close to 7% monthly recurring revenue (MRR) due to COVID-19, of which half was expected to be a temporary loss. Given the current economic condition, the Company has cut down the operating cash flow to GBP 250,000 per month.
Share Price Performance
1-Year Chart as at June-30-2020, before the market close (Source: EODHD/Others, Thomson Reuters)
CloudCall Group PLC shares were down by 2.10% to trade at GBX 79.30 per share (as on 30th June 2020, before the market close at 8.52 AM GMT+1). Stock 52 week High and Low were GBX 122.91 and GBX 65.94, respectively. The Company had a market capitalization of GBP 31.40 million.
Business Outlook
CloudCall would focus on integration with more CRM platforms. The Company has considerable visibility over the future revenue as it generates a significant recurring revenue; however, the current pandemic is going to slow new sales bookings. The Company would invest in growth projects as per the market conditions. The Company is planning to strengthen the messaging services to have the strong omni-channel messaging capability by adding new social media channels.
