CEO Q&A with Andy Hollingworth at Toople PLC (LON:TOOP)

Toople PLC (LON:TOOP) Chief Executive Officer Andy Hollingworth caught up with DirectorsTalk for an exclusive interview to discuss their final results for the year ended 30th September 2018.

 

Q1: I see you’ve released your results today, can you talk us through the highlights?

A1: We’re really really pleased to release today’s results and we’re releasing them earlier than we’ve released them before.

Our headlines are that revenue grew in the period and the results today are up to the 30th September 2018, revenue grew by 17.5% to just over £1.5 million and that growth delivered and driven by the broadband revenue growing by 112%, cloud-hosted revenue has grown by 345% and the mobile revenue growing by 221%.

Contributing within those figures is a gross profit increase of 28% so we’re pleased with the gross profit growth which means it’s not revenue or cost, we’re actually growing the right form of revenue. Obviously, with broadband, hosted and mobile being our high-end revenue products, that’s the right kind of revenue to grow. Overall gross margin improved as well up to 13.5% but specifically the retail margin was up from 16.5% to 20%.

There are two aspects to our business which our retail side, our direct small business side and also our wholesale business. What we’ve been able to do in the year is manage the scaling down of the historical wholesale business which typically comes in at 4-6% gross margin and significantly grow and rapidly grow the directly contracted small businesses that are joining Toople on a monthly basis.

 

Q2: You also completed a successful fundraise this year, can you tell us what that was for and does that mean you’ll to raise more money in the short term?

A2: Certainly not. We’re very pleased with the fundraise that was over subscribed in September, we raised gross £2.2 million in September and that takes us through to cash generation. So, the in the short/medium/longer term, the Board believes that we are fully funded.

 

Q3: You had a bit of a change in the management team, can you tell us a bit more about what happened there?

A3: During the course of the year, we brought in a new Chief Operating Officer, something to drive the customer experience, something that we are very precious about. This is to ensure that when a customer makes the decision to leave one of the major players in the UK market to join what is relatively unknown in Toople, we give the best customer experience. Our Chief Operating Officer that joined us at the early part of the financial year has significant experience in the telecoms sector and also in organic growth businesses.

Latterly, in the financial year, we were able to secure the services of a new CFO, that CFO brings significant market experience in terms of stock market experience, PE market experience as well as VC market experience and has a track record of growth through organic acquisition and M&A activity.

So, we’ve a really really talented board, well depth of experience in our sector and also in the leadership team in the day to day running of the business.

 

Q4: Something else that’s clear is the momentum behind this business, what’s been happening this year to build that up?

A4: Initially at the start of the year, we increased our costs slightly by making the decision to bring the sales in-house as opposed to outsourced, that’s proven to be the right decision for a number of reasons.

They have provided at least a 50% growth in our monthly order rate and interesting, when you look at the October numbers, when you look at the November numbers and latterly September number as well is every single enquiry that we generate via our digital marketing, in-house sales team are now converting and closing 61% of all the leads that we generate. If you then look at the actual leads that we generate and a percentage of the customers we actually get to talk to via those leads that we generate, they’re converting 78% of all the people they get to talk to.

So, that is post-year driving the revenue growth significantly, it’s also driving the cost of acquisition down for the customer as you increase your conversions against your lead costs, that drives the overall cost per customer as well.

That’s important to us, let’s be clear, we could grow this business faster in terms of revenue terms and that’s synonymous probably with the telecoms industry that a lot of people are in it for revenue and for growth. Of course, revenue is important and revenue growth is important but not at all costs.

We could grow faster if we were prepared to pay more per customer but as the CEO of the business and a significant shareholder of the business, I make the right decisions from an investment point of view and make sure that every single customer who joins us comes in at the right cost per customer.

Typically, 98% of our customers who join us on a month by month basis, are signing a minimum of a 24 month contract so we make sure that our cost per acquisition of customer doesn’t go past the first 12 months. Obviously, we can then enjoy through delivering a great customer service, a fixed price strategy to small business and then enjoy the margin from 12 months to 24 months and beyond, customers typically stay with you obviously longer than their contract period.

 

Q5: Just talking about your customers, they’re small and medium enterprise which means the customer experience must be very important. How have your customers responded to the services that you do provide?

A5: I think what you’ve got to do is, I would always sit here and tell you that yes, absolutely that’s wonderfully and brilliantly, but I think you’ve got to look at the independent analysis out there in the market. Probably one of the best sites to look at is Trustpilot where customers can go and on and customers can rate you independently in an unknown environment.

Our score on Trustpilot at this time is 8.7 out of 10, that is by far and away the top score in the UK telecoms market, both from a consumer point of view and a business to business point of view.
The company’s strategy is very very simple and that is we always give small businesses a fixed price so that when they sign up for a 24 month period, the price they pay per month 1 will be the same as the price they’ll pay in month 24. We do not sign customers up on hero deals where we have a strategy to increase the cost to the customer during contract. Why? Very simply, all the customer is waiting to do at the end of that is leave the contract.

We deliver a destructive price right at the start and we make sure that the small business can budget for the life of their contract, that’s really important especially in times like we’re in at the moment with economic uncertainty. Small business have been responding to that very well and the Trustpilot scores suggests we’re delivering the customer experience in exactly the right way in which we wanted to deliver it.

I think also another indication really that you’ve got to look at, I think we’ve quoted this publicly, is that we’re seeing an increasing amount of orders on a monthly basis from our existing customers, something like 20% of our orders on a monthly now come from existing customers. If you weren’t getting it right and people weren’t enjoying our experience, you wouldn’t see that percentage increase.

Of course, there’s a financial benefit to that because the more that existing customers add and the more sales that you do through existing customers, well that’s a zero cost acquisition for you so that also manages your cost of acquisition down.

If I’m truthful and honest, proactively, at this point in time through the growth we’re experiencing through the business, we’ve not had a strategic plan to actually drive further wallet share from our existing base. That’s certainly on our agenda for early 2019 and the more that we get into managing and talking to the existing customers and understanding what share of their wallet we don’t have then I think you’ll see some really exciting performance in that area.

 

Q6: I’ll come to that in a minute, you’ve just been talking about the numbers, you’ve ended the year on a high note, can you tell us more about October numbers?

A6: October, as we stated via the last RNS, was a record month for the company in terms of over 500 orders coming in just on the direct small business side. and more excitingly, November surpassed that number as well.

We’re on the 18th day of December and we can see the run rate for December is another increase from November, it won’t be a record month in December, let’s be clear business will finish on Friday. Actually, the one thing we don’t do is, from Friday onwards, we will not be committing install dates on broadband during the Christmas and New Year period, we’ll make sure that those install dates go in the first week/second week of January. So, there’s no disruption in the seasonal downturn to a customer’s business.

Post-period, the order growth is north of 50% on a month by month basis and it’s important that we talk about October/November/December. When you right an RNS and you’re putting an RNS out to say October was a record month, actually as a shareholder and investor I want to know is that sustainable?

I think what we can see now is that through the October performance, the November performance and the early December performance, it is absolutely sustainable.

 

Q7: You did touch on this but what does the future hold for Toople?

A7: Well, the future for the company is doing a lot more of the same. We are very very low in our market share against a market that has 5.4 million small businesses, so we’ve got a long way to go in terms of increasing our market share, we’ll be doing that month by month.

At the same time, we need to make sure that we hold this superb customer experience that we’re delivering, continue to land the major contract wins which we’ve been successful in reporting this year and also growing our wholesale business and our partner business in a way that provides a good gross margin where historically the company had revenue in its balance sheet sort of 2017 and pre-2017 that was partner business at between 4-6% margin which negates the overall gross market of our business.

So, during 2018, we’ve managed to manage that revenue, bring better gross margin in through our partner business, through new partners so all aspects of the business are actually now in growt but growth at the right acceptable margin.

So, the outlook for gross margin for the business is solid, is good and I expect to see increasing gross margin as we go forward.

Click to view all articles for the EPIC:
Or click to view the full company profile:
Facebook
Twitter
LinkedIn
Toople Plc

More articles like this

Toople Plc

What is no monthly contract broadband?

Quite simply, this is a broadband service that does not tie you into a contract and regular monthly payment to which you are committed for a fixed period. The appeal of having is no contract in

Toople Plc

Is pay-as-you-go broadband worth it?

Pay-as-you-go broadband might sound like an attractive idea at first. It might be if there really was a genuine offering on the market. But user needs on one hand and the commercial realities on the other,

Toople Plc

Mobile dongles for my business

What is a mobile dongle? A mobile dongle is a small device that plugs into your USB port and allows you to access the Internet from anywhere using the 4G network. The only thing you need

Toople Plc

Top tips for faster broadband at work

Most people know that broadband speed can vary, depending on the amount of traffic that’s moving across the shared connection at any time. This is call ‘contention’. And let’s be clear, unless you have a dedicated

Toople Plc

Online security: best practices for your business

Cyber security has been high on the IT agenda for some time and it’s an area no business can afford to neglect. While great protection is available from many expert software and service providers, it is

Toople Plc

What does the big PSTN switch-off mean for your business?

In December 2020, Openreach started the process of retiring its old public switched telephone network (PSTN) and Integrated Services Digital Network (ISDN) services. These are the services which were, in the old analogue world, used to

Toople Plc

How to get broadband without line rental

Few of use our landlines to make and receive phone calls anymore and the only reason many of us have them is because you have to have one to receive broadband. You might well ask “why

Toople Plc

Mobile dongles for business

What is a mobile dongle? A mobile dongle is a small device that plugs into your USB port and allows you to access the Internet from anywhere using the 4G network. The only thing you need

Toople Plc

Your guide to UK broadband providers

There are hundreds of companies supplying broadband to businesses and consumers in the UK, and trying to tell the difference between them is not easy. But making sure you pick the right service for your needs is important.

Toople Plc

Top tips for switching your business broadband

If you are thinking of switching to another business broadband service, there are several things you will need to consider. In theory, it should be a simple enough process; in practice, it can be fraught with difficulties.

Toople Plc

Who is the most reliable broadband provider?

At home and at work, many of us are highly dependent on our broadband connections. This makes reliability a decisive factor when it comes to choosing the best supplier for your needs. Every Internet service provider