Eckoh capitalising on US opportunity

Enter Eckoh (ECK), which spans two complementary areas: secure payment products and customer contact services. Its patented payment products, including CallGuard, remove payment data from contact centres and IT environments. This helps clients to reduce the risk of fraud, secure sensitive data and comply with statutes including the Payments Card Industry Data Security Standards. Customer contact services enable enquiries and transactions to be implemented via any device, which improves efficiency for Eckoh’s clients.

The contact centre industry is vast, accounting for 4 per cent of the workforce in both the UK and the US (Eckoh’s key regions). Eckoh covers just over 3 per cent of its UK addressable market, and less than 1 per cent of its US market. Moreover, its products face limited competition. Judging by the results for the year to March 2019, it is already capitalising on the opportunity at hand. New business contracted soared by 47 per cent to £22.6m last year, while total business contracted including renewals rose 62 per cent to £32.7m.

True, Eckoh’s income statement was knocked by new revenue-recognition rules. These rules reduced reported sales, particularly for the newer US business where more fees are charged upfront. A 16 per cent fall in adjusted cash profits to £4.3m also reflected a planned rise in headcount, and investment in sales, marketing and IT. But the rules also helped to lift recurring revenues, which came in at 83 per cent of sales, and also boosted Eckoh's reported deferred revenues (advanced payments), which were up 44 per cent last year to £14.6m. This helped the group report visibility of more than 90 per cent of UK sales.

Eckoh sells its full product portfolio in the UK, most of which is delivered through its hosted platform. Here, new business rose 69 per cent to £10.1m. Sales rose 5.2 per cent to £19.4m; a small but encouraging uptick, after the 2 per cent decline seen in 2018. Action taken, including a sales team rejig, appears to have paid off.

The US business is smaller than the UK, but is growing fast. Here, Eckoh focuses on three areas where it faces the least competition: secure payments, support and Coral – its contact centre agent desktop product. New secure payments business climbed by nearly half to $13.7m (£10.9m) – Eckoh’s strongest period since entering the country in 2015.