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• Revenue: GBP43.8 million, a 14% increase on a constant currency basis.

• Adjusted PBT: GBP19.8 million, up 18%.

• Cash: GBP29.9 million, a 21% increase.

• Recurring Revenue: GBP15.5 million, with a compound annual growth rate of 24% since 2019.

• New Orders: GBP38.1 million, a 21% increase.

• Gross Margin: 80.5%, an increase of 1.8 percentage points.

• Adjusted EBITDA Margin: 47.4%.

• Dividend Per Share: 13.2p.

• Backorder: GBP46.9 million.

• New Customer Sales Pipeline: GBP262 million, up 8%.

• R&D Investment: 13,000 days, a 17% increase over the prior year.

• Effective Tax Rate: 22.5%, up from 19.7%.

Release Date: November 27, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Cerillion PLC (LSE:CER) achieved new highs in key financial KPIs, with adjusted PBT up 18% and new orders up 21% to GBP38.1 million.

• The company has a strong global presence with around 80 customer installations in 45 countries, indicating a broad market reach.

• Recurring revenue has been growing at a faster rate than total revenue, with a compound annual growth rate of 24% since 2019.

• Cerillion PLC (LSE:CER) maintains a high customer retention rate, with most customers staying for more than five years, contributing to a stable revenue base.

• The company has a strong balance sheet with net cash up by 21% to GBP29.9 million, providing financial stability and flexibility for future investments.

Negative Points

• The sales cycles in the telecom industry are long, often taking 9 to 12 months or longer, which can delay revenue recognition.

• Despite growing revenues, the backorder book has been flat for three years, indicating potential challenges in converting orders to revenue.

• Total receivables have increased from roughly 40% to 60% of sales over the last two years, impacting net working capital and cash flow.

• The company faces pricing pressure in the market, although it positions itself as a cost-effective solution compared to larger competitors.

• Cerillion PLC (LSE:CER) has not made any acquisitions since its IPO in 2016, which could limit growth opportunities if organic growth slows.

Q & A Highlights

Q: Your new business pipeline stands at GBP262 million. What's the shelf life of the individual opportunities? A: The sales cycles in telecom are quite long, typically ranging from six to twelve months, sometimes even longer. Opportunities are not kept in the pipeline indefinitely; if there's a significant delay, they are removed. However, they can remain in the pipeline for up to 18 months.

Q: Are the sales pipeline qualified leads? What percentage historically convert to sales? A: The sales pipeline includes sales-qualified opportunities, which are rigorously vetted. While we don't publish a specific win rate, once we reach the shortlist stage, we typically close one in two or one in three opportunities.