Speech recognition services provider Eckoh is continuing to win new contracts and build its underlying profitability.
In the six months to September 2011, revenues grew 19% to £5m, while underlying profit improved from £253,000 to £443,000. Increased investment in staff and offices held back the profit growth. Eckoh has recognised a deferred tax asset of £2.1m and it has a further £4m of losses that can be offset against future profit that have not been recognised as yet.
Eckoh is generating enough cash from its operations to more than cover its capex and its dividend payment. Edison expects Eckoh to have net cash of £6m by the end of March 2011. Last year Eckoh paid a maiden dividend of 0.1p a share and the dividend is forecast to increase to 0.13p a share. Eckoh is paying one dividend a year.
The strength of Eckoh’s business is shown by the fact that 90% of revenues are recurring.
EckohPay, which enables card payments to be made over the phone, has received Payment Card Industry Data Security Standards level 1 accreditation. This is the highest level achievable.
Payment processing provider Servebase is the latest reseller that Eckoh has signed up. Servebase will sell EckohPAY along with its own services. Servebase has a customer base of banks. The core reseller relationship with BT has been renewed for three years. There is no significant overlap among the existing resellers.
Demand for speech recognition services is growing. Edison forecasts a full year profit of £1.2m, rising to £1.9m in 2012-13 as this year’s investment in building up the operational base of the business starts to pay off.
At 10p a share, Eckoh is valued at £20m.
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