Eckoh FY adjusted operating profits 'marginally ahead' of expectations

9th May 2024 10:15

(Sharecast News) - Data security solutions business Eckoh said on Thursday that adjusted operating profits were "marginally ahead of market expectations" in the year ended 31 March despite seeing full-year revenues decrease.

Eckoh expects to report adjusted operating profits of approximately £8.3m, up from £7.7m and beating market expectations of £8.2m, representing a 17% increase on FY23 pre-forex.

The AIM-listed group stated a higher proportion of cloud-based SaaS revenues and ongoing cost efficiency meant it had also seen operating margins improve.

Eckoh expects to report revenues of approximately £37.2m for the year, down from £38.8m a year earlier, slightly behind market expectations as a result of the ongoing transition of client deployments to the cloud, the first contract renewals of several large on-premise US clients, and the elongated sales cycles that delayed the closing of contracts in H1.

Eckoh also noted that it had won a record level of total contracted business in H1, a trend that continued in H2, resulting in £52.6m of total contracted business in FY24, over 50% higher than FY23 and a record for the company.

Chief executive Nik Philpot said: "At our interim results in November we said that the first half had been all about excellent contract renewals and that the second half would be all about new business wins, so it's gratifying to see the record levels of new business coming through. We have built a strong pipeline of exciting new business opportunities and we are already seeing tangible signs of the impact the new version of the PCI standard is having, with an increased number of formal tender processes as companies look to outsource this challenging requirement to a specialist like Eckoh.

"Our unusually high level of multi-year renewals (including many that were not scheduled until this year), alongside our newly won clients, gives us excellent revenue visibility and improves our ability to further increase our strong cross-sell and upsell pipeline. We expect total renewal value to be lower this year because of the size and timing of those clients whose contracts are due to expire, but we expect levels of new business coming from our existing client base to grow significantly and our operating margin to improve further as we leverage our cloud platform and new product set."

As of 1300 BST, Eckoh shares were down 3.88% at 40.85p.

Reporting by Iain Gilbert at Sharecast.com