Cerillion plc (LON:CER) Chief Executive Officer Louis Hall caught up with DirectorsTalk for an exclusive interview to discuss interim results, product potential, scaling up for growth, another major contract win, and confidence in hitting goals in this financial year and beyond.
Q1: Louis, just looking at the results today, could you just tell us what the key features were?
A1: Cerillion has seen very strong trading in the first six months of our FY24 with revenue up 10% to £22.5 million. Adjusted EBITDA up 14% to £10.5 million and annualised recurring revenue up 14%, also to £15 million. In addition to that, net cash is also up 13% to £26.6 million. So, we’re very pleased about that.
We’ve also seen a strong increase in new customer orders, affecting strong demand across the base, with total new orders up 32% to £20.2 million and that includes the €12.4 million contract we signed with a new telco customer, European Tier 1 back in November.
In addition to the orders progress, we’re seeing strong growth in the new customer pipeline so that’s up 20% to £254 million in the period, and just today we’re announcing the conversion of $11.1 million of that with a new customer when we announced in Southern Africa. So we’re very pleased about that.
Of course, all of this gives us confidence to increase the dividend by 21% to 4p.
Q2: The potential for your product is huge, could you comment on the marketplace?
A2: Essentially, the market for BSS, OSS or mission critical telco enterprise software is around £60 billion a year, according to analysis Mason, predicted to grow to £70 billion by ’27 so growing at 3.5% CAGR.
Of course, with our share of that market being very, very small, we have enormous potential to grow and become much bigger without having to see any significant growth in the overall market.
I think that what we’re pressing ahead is on the product solution, a SaaS productised solution where all customers share the same software, everything’s configurable, but it doesn’t involve any customisation. I think that that’s becoming much more accepted in the market as a way to deliver BSS, OSS software.
So, I also think the fact that we’re offering a lower cost of ownership, more flexible solution, more of an OPEX rather than CAPEX based solution means that we’re well placed even in a telco world where major CAPEX investment may be under some pressure.
Q3: Could you tell us more about how you’re scaling up the business for growth?
A3: So, obviously, a lot of investment into R&D. We’re planning to spend around 13,000 man-days of R&D effort this year and in the first half, we’ve spent just over £6,000 man-days on R&D so that’s obviously a key focus.
Also on the sales front, we’ve introduced new self-resource into the US, into Central Europe and into Asia in financial ’23 and we’re starting to see already the impact of that coming through into growth in the sales pipeline.
So, I think we’ve got to invest in products, we’ve got to invest in delivery, and we’ve got to invest in sales, and supporting that is the expansion of our base in Bulgaria, where we now have a full subsidiary established and we’re about to move into larger office space to accommodate that growth. Obviously, also in Singapore, where we’re in the process of establishing a full subsidiary in Singapore to support sales growth in the Asia-Pacific region.
Q4: Not only have you delivered a great set of results, but you’ve also announced another major contract win today. Could you tell us anything about that?
A4: So, there’ll be more detail on this in a trade release, hopefully later this week or next week. This is essentially a provider of convergent telecoms across Southern Africa, across South Africa, Namibia, Mozambique, Angola, Zambia, and they’re providing a range of services to different communities, and I think will become quite an important player in the region going forward.
Q5: Are you confident about hitting your goals for this financial year and on Cerillion’s longer term prospects?
A5: Yes, I think obviously the new contract we’ve announced today helps enormously with supporting our existing market expectations so in terms of forecast, we remain confident about that.
I think the momentum we have within the existing customer base in terms of sales progress, and also new contracts announced in November and announced today, give us a lot of confidence about the future. Of course, coupled to the big increase in the sales pipeline, which I think will make a big difference in terms of progress in 2025 and beyond.
