CloudCall tumbles as costs squash revenue gains

CloudCall Group's shares dived on Wednesday after its profits were all but wiped away by an increase in administrative costs and cost of sales.

The cloud-based software business saw its revenue climb to £110.1m over the course of 2018, an increase of 13% compared to the year before, but this was more than offset by a 26% jump in cost of sales to £69.0m and a 7% jump in administrative expenses to £41.0m.

The AIM traded company said it footed exceptional costs that included £3.5m in relation to restructuring activities in Europe and the UK, which it said has streamlined operations and is expected to generate annual cost savings of between £4.0m and £4.5m.

Consequently, profit before tax was greatly reduced from £3.8m to £0.3m, while Cloudcall had cash and cash equivalents of £26.0m at the end of the year, down from £31.5m at the same point the year before.

Jason Walsh, chief executive of CloudCall, said: "2018 has been a year of continued strong progress for the business. We have stayed true to the core principles of our strategy and have delivered strong revenue growth and fundamentally shifted the dynamics of the business. We have the platform to seize the opportunities that exist with our partners to provide them with the products and services we excel in."

Worldwide customer numbers grew by 50% to 8.2m, led by increases in India and Turkey, while the company made strategic investments in cyber risk management technology developer KYND, key cover provider Valeos and Indian business process management company Globiva.

For the current year, CloudCall said it will make further moves in India and China after having gained a South East Asian commercial hub after incorporating a new business in Singapore.

The outfit also said it is "ideally placed" to effectively respond to Brexit, which it does not anticipate having a significant impact on day-to-day operations.

"Our global footprint is expanding gradually and we are continuing to deepen our partner and product reach in markets where we see significant growth potential. We are growing strongly in India and Turkey and are excited about our recent launch into Bangladesh and the prospects for our Chinese business now the technical infrastructure is complete. We are looking to the future with increasing confidence and expect further strong strategic and operational progress in 2019," said Walsh.

CloudCall's shares were down 15.38% at 88.00p at 0935 GMT.