PCI-Pal – beating market ‘expectations’

Just over a month ago, this ‘secure payments’ specialist announced a very encouraging trading update for the first half of its current financial year.

Next Tuesday (1 March) the actual interim results for PCI-Pal (LON:PCIP) will be published, hopefully together with further bullish news about the full year prospects and those for the next year, starting 1 July 2022.

The business

The group is a global provider of contact centre secure payment solutions for organisations taking card payments by telephone, whilst minimising the risk of data loss and cybercrime.

Payment card industry (PCI) compliance is mandated by credit card companies to help ensure the security of credit card transactions in the payments industry.

PCI Pal is a leading provider of Software-as-a-Service (“SaaS”) solutions.

The preferred solution provider

The group’s vision is become the preferred solution provider that technology vendors globally turn to for achieving PCI compliance for payments by phone.

The company’s products secure payments and data in any business communications environment including voice, chat, social, email, and contact centre. 

Already acknowledged globally

It is integrated to, and resold by, some of the worlds’ leading business communications vendors, as well as major payment service providers. 

The entirety of its product-base is available through its global cloud platform, which is hosted in Amazon Web Services, with regional instances across Europe, the M, iddle East and Africa, North America, Australia and New Zealand. 

Impressive growing client list

The company’s clients list includes well-known organisations such as Ikea, Ecotricity, AllSaints, DHL, Pennon Water, InsureandGo, British Medical Journal, Made.com, UNICEF, Serco, Trader Corporation, IFLY, Severn Trent Water, Vax, South Staffs District Council, Verex, Net-a-Porter, SixPackAbs, Virgin Active, DCC Outsourcing, and Schneider Electric amongst hundreds of others.

A specialist in the world of digital payments

Over the past decade there has been a revolution in the way in which consumers choose to pay for goods and services, with most Western and Asian countries now favouring to pay digitally rather than by using cash.

A digital payment is described as any payment using digital instruments. Basically, that covers any payment that does not use cash. Such examples are: credit card payments, bank transfers (direct debits, standing orders), digital wallets (Apple Pay, PayPal), Alternative digital currencies (Bitcoin).

This digital payment trend is set to continue well into the future, therefore it is important that organisations offer these choices to their customers, and that they are secure and that is just where this company comes into such transactions.

Protecting both clients and their customers

Safeguarding reputations and trust, the company provides globally accessible cloud solutions ensuring that call conversations are PCI compliant and that personal data is protected.

Its products can be used by any size organisation globally, and proudly it works with some of the largest and most respected brands in the world.

Growing equity following

There are 59.55m shares in issue.

Larger professional shareholders include Canaccord Genuity Group (16.6%), Gresham House Asset Management (10.6%), Burgundy Asset Management (8.38%), Octopus Investments (7.76%), Herald Investment Management (5.38%), Peter Wildey (4.06%) and Unicorn Asset Management (3.06%). Three other individuals hold a total of 7.68% of the equity.

Recent Trading Update – beating expectations

CEO James Barham informed shareholders that the first half year to end December 2021 was excellent “All of the group’s key metrics are either at or ahead of management expectations, and as a result, the group anticipates that revenue and losses before tax will now be better than the current market expectations for the full year.”

The interims will show that the demand for the group’s market leading cloud services has continued to gather pace as a result of its well-established and growing partner eco-system.

Its targeted, account-based direct sales activity has shown strong early results.

“With the strength of trading shown to date, and a growing pipeline and partner eco-system, we now anticipate that the group will exceed its current market revenue expectations, resulting in a reduced loss before tax for the financial year. The Board remains confident in the longer-term outlook for the group and continues to invest in its ambitious growth strategy.“

Broker’s View – 125p a share

Analyst Lorne Daniel at brokers finnCap estimates that the current year will see the company increase revenues from £7.4m to £10.9m upon which its development programme will see it not make as bigger loss as first anticipated. His figure for the 2021/22 year to end June is a £3.7m loss.

However, going forward he has pencilled in £14.3m of revenues and just a £2.2m loss to end June 2023.
His expectations appear to be for a cash positive 2024 trading year.

Bullishly he has a 125p a share price objective currently but will be reviewing that upon next Tuesday’s results announcement.

My View – a new Target Price

Was it purely luck last year when I profiled this company? Its shares rose nearly 60% inside the following two months, hitting 121.5p at one stage.

That was before suggestions from a third party that there may well have been patent infringements, which knocked the shares down to 81p by mid-June. They subsequently just drifted back to an inactive level range of 55p to 63p.

Last night they closed at around 55p – a level at which a speculative trade, ahead of the interims and accompanying statement next Tuesday, could well prove beneficial.

I now set a new Target Price of 70p.

(Profile 11.02.21 @ 76p set a Target Price of 95p*)