LoopUp Group PLC (AIM:LOOP, OTC:LUPGF) saw its shares fall by nearly 3% in morning trade as the cloud telephony company predicted that underlying profit (EBITDA) for the financial year 2022 (FY2022) will come in marginally below market expectations due to higher transition execution costs related to its recent revenue sharing and customer transfer agreement with PGi Connect.
However, these costs are not expected to impact on profitability in FY2023, the AIM-listed firm added, and said FY2022 revenue is set to be marginally above analysts' expectations at no less than £15.5mln, up from £6.6mln in the first half of the year.
The deal with PGi Connect gives LoopUp the rights to onboard PGi Connect's conferencing services customers in return for a share of invoiced and received revenue.
During October, the company said, around 7,000 out of 8,100 former PGI Connect conferencing services customers successfully transferred to service provision on LoopUp's Meetings and Event platforms and have subsequently been invoiced for their October 2022 licences and usage.
As a result, overall group revenue run rate for October has increased by more than 2.5 times from that in September, LoopUp said.
“This rapid acceleration of revenue run rate leaves the group in a materially stronger position to accelerate its primary Cloud Telephony growth line of business in 2023, where a sizable market opportunity exists for the group's differentiated multinational value proposition,” it added in a statement.
The cloud telephony market is forecast to grow to £32bn by 2025, the company noted.
LoopUp said it has secured 76 cloud telephony customer wins, comprising 161 individual contracts, since it launched the service in the third quarter of 2020, at an accelerated win rate.
The 76 customer wins represent expected annual recurring revenue (ARR) of around £2.8mln and an expected total contract value (TCV) of £9.2mln.
So far, there has been zero customer churn in cloud telephony, LoopUp added.