PCI PAL confident on path to profitability

Most contact centres need to take money from customers. Traditionally, people would simply read their card details over the phone. Today, sensible businesses know they need to keep sensitive customer data away from both their staff and their enterprise software. The risk of breaching PCI, GDPR or even the California Consumer Privacy Act is simply too great. That’s where PCI PAL and a small band of competitors comes in. 

The UK based contact centre payment specialist reported strong revenue growth, up 62% to £11.9m, in its H1 2022 results. Its home market continues to develop strongly but PCI PAL has also begun generating serious traction in North America which now accounts for 28% of sales. Management estimates the total addressable market is £300m pa – based on 10m agents worldwide at £30 pa per seat – so there is a long way to go.

The company says its new cloud-based solutions have helped gain market share. 89% of revenue is recurring which means PCI PAL has the “hallmarks of a strong and growing cloud company and SaaS business model”, according to Simon Wilson, its Chair. One of these hallmarks is high and growing gross margins – up 11ppts to 84%.

The switch from installed software to the cloud has been accompanied by a new partner-focused channel strategy. This also seems to be working well. 217 new contracts were signed in the first half; 85% from a blue-chip rosta of partners including many leading contact centre software vendors and BPOs such as Genesys, Sitel and Capita. The deployment model looks slick. New customer accounts are live five months after signature on average. 

New products include “the first global integration available for Amazon Connect contact centre customers” and a new interface to openbanking payments, as an alternative to cards. The latter uses TrueLayer’s API aggregator. 

Most contracts are £15-20K pa but its largest is 5,000 seats. Although most new contracts are “mid-market,” 43% of revenue is from customers paying over £100K pa. Customers seem happy. Churn is just 3%.

The company prides itself on its employees. Wilson says he is pleased to “attract first class technical talent despite the enormous impact of the Great Resignation,” and grew headcount from 71 to 103. Creditably, “in a year where jobs markets have been turned upside down…we have achieved top quartile employee retention.”

Administrative expenses were kept under control, rising just 37%. The company’s investment in North America – where over-enthusiasm can often sink new market entrants – looks to be very measured. 

Operating losses narrowed to £2.02m from £3.85m with “excellent progress towards break even … in the coming year, with monthly profitability following shortly after that point,” according to CEO, James Barham.

Adjusted EBITDA, the company’s preferred measure of profitability, showed a loss of £1.9m with positive contributions from EMEA outweighed by investment in North America. 

The only blot on an otherwise bright set of results is £0.8m of legal fees to defend a patent case brought by Sycurio, a competitor formerly known as Semafone. It’s hard to establish the total risk but the company estimates total defence costs could be £3.7m if the cases reach court.