After seeing a demand spike immediately following lockdown, remote audio meetings company LoopUp (LOOP:AIM) has continued to trade very strongly, meaning annual performance for 2020 will top market expectations.

Shares in the company jumped more than 10% in morning trade on Thursday, hitting 180.5p for a rough £100 million market valuation, its largest in more than a year.

LOCKDOWN DEMAND BOOM

Revenues for the first-half were £31.9 million, up 43% year-on-year, while earnings before interest, tax, depreciation and amortization (EBITDA) jumped 249% to £12.2 million, helped by expanded gross margins (up four percentage points to 71%) and slightly lower operating expenses.

Net debt stood at £5.4 million, down from £9.3 million at the end of December 2019.

‘We think revenues were down circa 5% year-on-year through to mid-March, and then the May trading update implied revenues more than doubled from mid-March to end April,’ said analysts at broker Numis.

Numis estimates May/June revenues rose by something like 40% to 50%.

The broker had been forecasting £14 million of EBITDA for this year to 31 December, but it raised its estimate by 22% today to £17.1 million, although Numis admits that ‘forecasting remains hard,’ given the opacity of the near-term business environment.

PLACE IN WORK FROM HOME WORLD

The working from home crisis has provided a clearly significant short-term boost, but questions remain about how much of this shift LoopUp will be able to capture.

‘An 8.8-times current year EBITDA multiple (pre this morning’s upgrades) suggests that investors don’t expect the bonanza to last’, said Megabuyte analyst Philip Carse.

There is huge competition from IP-based and often free at point of use virtual meetings services, all fighting for a place at the work from home table.

‘Microsoft Teams, Zoom and Google Hangouts are now the platforms of choice versus LoopUp’s telephony-based paid for services,’ said Carse. ‘Contrast LoopUp’s 8.8-times EBITDA with Zoom’s 39.5-times revenues.’

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Issue Date: 16 Jul 2020