Customer engagement systems supplier Netcall (LON:NET) is accelerating organic growth thanks to the investment it has previously put into its cloud-based technology. Recurring revenues are rising, and cash generation is strong. Annual contract value grew from £18.5m to £24.2m over the past 12 months.
Netcall gained an $19m three-year cloud subscription contract during the period, but only £300,000 was recognised in the year to June 2022. Group revenues were 12% ahead at £30.5m, with cloud revenues growing 30% to £10.7m. Control of overheads helped underlying pre-tax profit from £2.6m to £3.9m. The dividend has been raised from 0.37p a share to 0.54p a share.
Netcall has moved into the transport and utility sectors and is increasing the number of partners. The market for automation and customer engagement is estimated at $20bn and is growing by 20% a year. Research by McKinsey & Co suggests that one-quarter of processes will be automated within five years.
Canaccord Genuity has upgraded its pre-tax profit forecast for this year from £5m to £5.7m. The Business Growth Fund has exercised options relating to its loan note and the loan will be repaid. That boosts profit and earnings. Net cash could reach £21m by the end of June 2023.
Netcall has risen by one-fifth so far this year, making it one of the better performers on AIM. At 82.5p, the shares are trading on 29 times prospective earnings.
