Toople Plc (LON:TOOP), a provider of bespoke telecom services to UK SMEs, provided today the following update on trading.
Since announcement of the Company’s results for the year ended 30 September 2016, the Board has seen increasing competition in the SME broadband market such that it has become increasingly difficult for the Group to differentiate itself around this service as originally anticipated when the Toople brand was launched, in May 2016.
As detailed in the full year results, the Company is consistently evaluating its marketing efforts to ensure that the most effective routes to market are utilised, both from a delivery and cost perspective. As a result of the increasing competition in the broadband market, and recent changes in the cost of customer acquisition through certain channels, the Company is currently reviewing funding options to provide additional working capital and to accelerate sales growth in the higher margin, retail business.
Accordingly, the Board intends to focus on driving its cloud business telephony service, which has the benefit of having higher margins. The Company has seen strong interest in the newly launched telephony service which the Board believe should provide a key driver for new customer acquisition going forward. In addition to having higher margins, the telephony service has the additional benefit that customers (to date) are typically signing 36 month agreements. Over 70% of these customers also order Toople broadband for the connectivity. Growth in this service since launch has offset a downturn in new orders in the non-strategic, lower margin, wholesale business in the first two months of 2017.
The Board anticipates revenue growth in the period for the six months to March 2017 to show an increase in excess of around 60% over the same period in the prior year (H1 March 2016), and an increase of approximately 19% against the prior half (H2 2016). Losses for the period (H1) are expected to be reduced by circa 50% against H2 2016. The Board continues to focus on tight cost control.
Currently Toople has over 600 small businesses directly contracted with in excess of over 1,000 RGU’s (revenue generating units) across the customer base. *
*Wholesale numbers are excluded from this figure.
Andy Hollingworth, CEO, Toople Plc, said, “The Board believes that Toople’s proposition remains clear and attractive to the SME market. As a small company we have the benefit of being able to react swiftly when we see the market changing and whilst the increasing competition in the SME broadband market has provided us with additional challenges, we have been able to react and shift our focus to driving forward the cloud based telephony business as our flagship customer entry point. Early indications are that the Company’s cloud business telephony service is being well received by the SME market and the margins associated with this are attractive. With the market opportunity being clear, we will explore options to ensure we are able to capitalise on this effectively and drive further growth.”