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Maintel continues to evolve the business into a cloud and managed services player, despite the coronavirus impacting its financial performance.
The channel player updated investors with half-year numbers that revealed the toll the pandemic had taken on its six months ended 30 June.
Revenue declined by 17% to £53.4m, with recurring revenues accounting for 74% of that, up from 69% the same time last year. Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) was also down, by 24% to £4.9m.
Evidence of the shift in the business model could be found in the revenues coming from cloud and software customers, now accounting for 25% of revenues, compared with 20% last year. Cloud UCaaS (unified communications as a service) seats also climbed by 21% to around 80,000, with the firm revealing there was a strong pipeline of more business to come on that front.
The first quarter also saw the firm plough more investment into its ICON platform, extending the support it can provide for Microsoft Teams, which has proved popular during lockdown.
For CEO Ioan MacRae, the impact of the pandemic is clear to see, but so is the progress the business has made in redefining itself as a cloud and managed services player.
“Although the impact of Covid-19 in Q2 has meant that the first half of the year has been challenging, Maintel remains firmly on track with its transition to a cloud and managed services business, as evidenced by the continued increase in contracted cloud seats during the period and the building of a strong pipeline of both new and existing customers,” he said.
As well as Covid-19, Maintel felt the full impact of having lost four legacy support contracts a year ago, which hit revenues.
MacRae added: “Notwithstanding the above, performance in Q1 was positive, with revenue and cloud contracts in line with expectations and EBITDA tracking ahead. Revenue in Q2 was depressed by Covid-19, with projects being delayed and new contracts not being awarded. However, close control of costs in Q2 and the use of government business support schemes ensured that the impact on EBITDA for H1 2020 was minimised.”
He said the firm had taken “decisive and prudent actions” to make sure it could protect liquidity and working capital and it had continued to reduce net debt levels in the first half.
MacRae’s first anniversary with the firm is edging closer, having joined last autumn from Avaya, and he used the results announcement to point to the progress made under his leadership.
“As part of the transition to a cloud and managed services business, and in line with cost reduction initiatives, during H1 we completed a reorganisation of the senior leadership team, which removed over £3m of annualised cost, improving alignment across the teams to focus on a vertical sales approach, customer satisfaction and improved delivery of services and solutions,” he said. “This will deliver a £1.5m reduction in the cost base in H2 2020.”
MacRae struck an upbeat tone about the future prospects for the business, with orders starting to come in from both public and private sector customers. “The cloud pipeline is very healthy and I am confident that we will close the year with contracted cloud seats in excess of 100,000, demonstrating the strong progress we are continuing to make in our transition to a cloud and managed services business,” he said.