Cerillion Plc (LON:CER) Chief Executive Officer Louis Hall caught up with DirectorsTalk to discuss interim results, new customer wins and confidence in its full-year growth forecast.
Q1: Louis, just looking at today’s results, can you just talk us through the key features?
A: So, revenue and earnings were a little lower compared to the first half of last year, but this is a timing issue to do with where our customers’ software subscription agreement extensions and renewals land. Last year, the majority of these extensions and renewals occurred in the first half, whereas we anticipate that most of these will land in the second half of this year.
Overall, we’re confident we’re on track to grow by around 12% in line with consensus forecasts over the full year, supported by our backorder growing by 23% year on year, as at the end of April. On the back of an $11 million new customer contract signed in January with one of the national telcos in Armenia, which will make a strong contribution into H2, and an £8 million extension signed with the existing European customer in April that will also contribute into H2.
Consequently, we’ve increased our dividend by 20%.
Q2: Is the recent slowdown in global growth impacting on Cerillion’s markets?
A2: Not really. Telecoms, as we said before, is a market in which sales cycles are usually quite long anyway, they are long-term investment decisions being made about critical infrastructure, which tends to be less impacted. I think to the extent that telcos are looking to cut costs these days, driven by a need to keep investing in more and more new technologies to deliver new services and the fact that customers’ wallets are not infinitely elastic means that there are pressures on telcos to cut costs.
I think that plays to our strengths because what we’re offering is a much more cost-effective, size-fits-all solution that is way more cost-effective than the more tailored solutions that are very service heavy, that are provided by our traditional competitors.
Q3: You mentioned earlier a new customer win in Armenia, could you tell us more about that?
A3: We’re really excited about this one. So, this is a whole new region for Cerillion, Eurasia, I guess, and this is one of the national telcos in Armenia. They provide the full range of fixed, mobile, broadband, TV services, what we call quad-play, and they have aggressive expansion plans.
I think this is a really important customer for us in the future, not just in terms of the value of this customer itself, but also the springboard to provide for further sales in that really interesting region.
