PCI-PAL – building up a head of steam

Mark Watson-Mitchell reviews PCI-PAL, a global provider of contact centre secure payment solutions.

You must know by now just how much I love the words ‘annual recurring revenue’ – well this is another company for my list.

Two weeks ago PCI-Pal (LON:PCIP) published its trading update for the half year to end-December 2020 and declared that it has a strong target of building up its recurring revenues going forward.

Currently losing money but…

It is currently capitalised at £45m and is losing money. This year it is estimated that on £6.7m sales it will lose some £3.8m to end-June.

But then next year to end-June 2022, it could well score just a £1m loss from an estimated 55% hike in sales to £10.4m. 

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.

A global service

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. 

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 it works with some of the largest and most respected brands in the world. 

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.

The preferred solution provider

The group’s vision is to 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 world’s 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 Middle East and Africa, North America, Australia and New Zealand. 

Growing equity following

There are 59.55m shares in issue. 

Larger professional shareholders include Canaccord Genuity Group (16.12%), Gresham House Asset Management (12.05%), Octopus Investments (11.01%), and Unicorn AIM VCT (3.37%). 

Three individuals hold a total of 12.52% of the equity.

Corporate confidence

On 28 January the group announced in its interim trading update that having signed up 93 new contracts, 75% won through third party reseller partners, its total annual contract value was 59% better at £8.28m.

At the time James Barham, the CEO, stated that, “With a strong pipeline and growing ecosystem of partners, we are now growing this business at pace and we can look forward with confidence to the second half of the year, with strong revenue visibility against market forecasts for the full year.”

Analyst Lorne Daniel at brokers finnCap was encouraged by the update and impressed by the visibility of further strong growth in its contracts. He commented that the company’s growth proposition is all about building the base of recurring subscription revenue at high margin, noting the particular growing traction in UK government – both national and local.

Recent share price strength is indicative

Do not be put off by the recent rise in the share price, from just 48p at the start of this year to the current 76p.

I feel that this company has now got its act together and is ready to show its ability to pull in significant contracts and turn from losses into lovely profits, within a very short time.

While obviously speculative because of its loss-making status, even so I now put the shares on a target price of 95p.