Revenues rise as Gamma integrates acquisitions

The AIM-traded business communications provider said UK revenue growth in the 12 months ended 31 December was 9%, to £375m, while the European business grew its revenues to £72.7m from £48.5m, including a full year of acquisitions made in 2020 in Spain and Germany.

Recurring revenue rose to £400.1m from £359.3m, and made up 89% of total revenue, down from 91% in 2020.

The company put the percentage reduction down to the acquisition of HFO in Germany, with the commissions earned on the mobile connections of its Epsilon subsidiary being non-recurring.

Gamma said its gross margin percentage was unchanged at 51%, with an increase in margins in the UK businesses offset by a decreased margin in Europe as a result of the Epsilon acquisition in 2020, which operates in a lower-margin sector.

UK indirect business grew “strongly”, the board said, with a focus on its existing partner base, as gross profit increased 8% year-on-year to £143.2m.

The UK direct business, meanwhile, continued to deliver positive growth, with gross profit rising 14% to £52.6m.

Gamma said the 2021 figures for the UK direct business included the results of Mission Labs since its acquisition on 3 March 2021, and excluded revenue from The Loop, after its sale on 31 December 2020.

The European business saw gross profit increase 47% to £32.7m, primarily as a result of the inclusion of 12 full months of trading for 2020 acquisitions.

It noted the level of gross profit in the second half, of £16.6m, was higher than the first half, at £16.1m.

Looking ahead, Gamma’s board said it was “positive” about the group’s outlook for 2022 and beyond.

“Our overall business performance in 2021 has been strong in an exciting growth market, and we have delivered an excellent set of financial results,” said chief executive officer Andrew Taylor.

“Throughout the year, and with a focus on delivering long-term growth, we have further developed and strengthened our technology, product, and people capabilities across Gamma, with our software development capabilities being significantly augmented with our acquisition of Mission Labs in March 2021.

“As part of a structured growth strategy and group operating model, we have made very good progress with the integration of all our acquisitions and have significantly broadened and strengthened our market capabilities through the development and launch of a set of new unified communications-as-a-service (UCaaS) products and services.”

Taylor said that was designed to “enable and accelerate” its long-term growth objectives across the UK and Europe, while providing a technology platform capability for the future.

“Despite the economic and business market impact of the Covid-19 pandemic, our performance was very robust throughout the year, driven by excellent partner and end-customer engagement levels, and a continued acceleration to cloud based products and services.

“We delivered strong unit growth across all key products - our newly launched bolt-on products and services have achieved attachment rates in line with our expectations.”

“As ever, we have continued to invest and strengthen both our direct and indirect channel propositions across all markets, with a focus on positively enabling our partners and our end-customers to be competitive and highly successful in their respective markets.”

At 1148 GMT, shares in Gamma Communications were down 8.6% at 1,380.18p.