LONDON (ShareCast) - (Sharecast News) - Business telecoms provider Toople reported a 57% improvement in its first half group revenue on Wednesday, to £1.08m, with revenue growth of 169% said to be attributable to its directly-contracted SME business.
The London-listed firm said its broadband revenue was up 159% in the six months ended 31 March, while cloud telephony revenue grew 82% year-on-year, and its mobile revenue was ahead 124%.

It did highlight a 7% decline in its wholesale revenue, which the board said was "largely expected" as it took action to eliminate legacy, low margin revenue.

Gross profit increased 150% year-on-year, or 72% over the second half of 2018, while gross margins improved by seven percentage points over the same period of last year.

Toople reported an 80% increase in marketing spend, or a 102% increase over the second half of last year, which the board said reflected increased level of spending to grow the business, which drove "significant" increase in lead conversion and sales, which would ultimately lead to a lower cost of acquisition per customer.

It had appointed a new head of digital and commercial marketing during the period, which would be focussed on driving growth, innovation and sales.

The company also highlighted a major contract win of £3.5m, which it had previously announced, which was in line with its expectations, with the first batches of customers now transferred over to the Toople billing platform.

New contract wins and partnership agreements were said to be continuing, which Toople said validated its decision to increase marketing spend.

Its "strong" current trading included a record month in April, and a healthy new business pipeline, with more than 900 orders in the month from over 600 small businesses placing orders with Toople for the first time.

Cash at period end stood at £1.15m, which was in-line with expectations and was sufficient to allow business to continue with the growth plan outlined at the time of the placing, completed in September.

"We continue to add more customers, typically on two year fixed term contracts," said Toople's non-executive chairman Richard Horsman.

"Our growing customer base will result in a lower cost of acquisition per customer and will boost our future outlook.

"We are now seen as a major disruptor in the SME telecommunications space, and we are being benchmarked against by a major tier one UK carrier."

Horsman said its competitors found Toople's transparency and fixed price contracts "unsettling", as it clearly appealed to small businesses.

"The major incumbents have traditionally used 'increase in price' strategies linked to RPI.

"We offer a product that provides customers with exactly what they need, at a fixed price and are increasingly becoming a natural choice for customers looking for an easy to use, no hidden costs, telecoms service."

Andy Hollingworth, chief executive officer, added that it had been an "excellent" six months for the company.

"We continue to execute on our growth strategy and are performing well against all our key operational and financial benchmarks," said Hollingworth.

"Our cash position as at 31 March 2019 stood at £1.15m and the board believes that the current cash position is sufficient to allow the business to continue to pursue the marketing strategy outlined at the time of our placing.

"The investments we have made in people and digital marketing are paying off."

In its direct business, Toople continued to generate an increased level of enquiries from potential customers, and its conversion rate remained strong, Andy Hollingworth explained.

"Additionally, our decision to move away from onerous historic partnership contracts with high debtor risk and low margin, will sacrifice revenue in the short term, but will deliver overall improvement in gross margins and ultimately profitability.

"Current trading is strong with another record month in April and a healthy new business pipeline, with over 900 orders in the month from over 600 small businesses placing orders with Toople for the first time.

"We believe we can still grow our customer acquisition rate with the same level of marketing spend and will be able to drive further efficiencies with our marketing and sales performance. We look forwards with confidence."

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