AIM-listed secure payments and customer contact centre software supplier Eckoh (ECK:AIM) rose 3.6% to 50p on news it has enjoyed a storming first half.
In a half year trading update the company said it has enjoyed a ‘very strong first half to the year with excellent levels of contracted business and double-digit revenue growth in both the UK and US.’
For the six months ended 30 September 2019 Eckoh’s US business continued to perform strongly with total business contracted worth $14.4m, up 15% year-on-year. The UK arm was not quite as firm but still very decent, where total business contracted of £7.9m represents an 8% increase.
Investors will have to wait for the official interim results on 19 November to get more detail but market forecasts for the full year to 31 March 2020 are currently pitched at £5.7m of adjusted earnings before interest, tax, depreciation and amortisation on £33.4m revenue.
WHAT INVESTORS SHOULD WATCH FOR
There are a couple of things for investors to look out for. First, the company admits that while it fully anticipates further growth in the second half, trading is expected to be first half weighted. This is due to the recognition of a significant contract extension for its agent desktop product Coral, with $2.1m of the total $3.8m value being recognised in the first half.
Even so, it still leaves Eckoh very comfortably placed to hit its 12 month forecasts.
The second thing is cash. At the start of the financial year in April the company had £8.3m of net cash on its books, up from £3.4m at 30 September 2018. Today net cash stands at £10.9m, roughly 9% of its £125m market value.
Importantly, this leaves Eckoh with plenty of financial firepower to invest in the business down the line, a great place to be given tightening regulation and the growing risk of data breaches and fraud that harm so many businesses and organisations as they transition to the modern digital reality.
This investment could come via bolstered technical expertise or acquisition, should the right opportunities arise.
