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111. Bull, Bear & Beyond – PCI-PAL: executive interview
5 Plays5 months ago
In this interview, James Barham, CEO of PCI-PAL, provides an overview of the business and highlights from its recent trading update. He explains the rationale behind the updated three-year strategic plan, discussing PCI-PAL’s growth targets and planned investment to achieve them. He outlines the company’s approach to product development and its channel and direct sales strategies. He concludes by summarising the key performance indicators for investors to track the company’s progress.
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About ‘Bull, Bear & Beyond’
Bull, Bear & Beyond': features candid conversations with senior executives and from our own team of experts from across industries, exploring strategy, innovation, and the opportunities shaping their markets and 60-second pieces are a compressed summary of content designed to convey our message in a single, easily shareable hit.
About Edison:
Edison is a content-led IR business. We believe quality investment content should inform all investors, not just brokers. Our mission: engage and build bigger, better-informed investor audiences for our clients.
Edison covers 50+ investment trusts, read about them here: https://www.edisongroup.com/equities/investment-companies/
Original interview published on 29/07/2025 and reposted as a podcast
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Transcript
Introduction to James Barham and PCI Pal
00:00:07
Speaker
Welcome to Edison TV. I'm Catherine Thompson, technology analyst at Edison, and I'm here today with James Barham, CEO of PCI Pal. PCI Pal is an AIM listed global cloud provider of secure payment solutions for business communications.
00:00:23
Speaker
Welcome, James. Hi, Catherine.
What does PCI Pal do?
00:00:26
Speaker
To kick off, could you give us a brief overview of the company? Yeah, sure. So Power is a SaaS technology company. Everything we do is in the cloud, ah in Amazon Web Services mainly for us. um We're around 19.5 million ar today, a fast growing business, and compound annual revenue growth in the region of 25% for the last five years in a row. so real growth company.
00:00:50
Speaker
um We operate in the business communication space. ah Primarily our customers use our solutions in contact centers, which were you know previously known as call centers, but they do a lot more than just handle calls today.
00:01:02
Speaker
um And we help those organizations to facilitate payments, so transactions that um that they carry out with their customers. um We also help them secure that data when it happens. And we do that in a way that's completely integrated to the entire environment that they're operating within.
00:01:19
Speaker
So we integrate tightly into the communications environment, ah particularly that part, the CRM, the desktop, and also the payment area as well within that.
00:01:30
Speaker
um And ah in terms of our go-to-market model, which is fairly um unique or it's a real strength of ours, um we sell predominantly through the channel. So we've got a very strong partner ecosystem that we talk to investors about.
00:01:44
Speaker
A lot about we're very proud of that. It's been a key part of our strategy since very early on. um And about 70 to 80 percent of our new business sales come through that partner ecosystem. And the partner ecosystem consists of lots of different types of companies that cover those sort of three environments I just talked about, but particularly the communication space.
00:02:05
Speaker
So we're very tightly integrated to and business communications platforms, CCAS and UCAS, so buzzwords, Contact Center as a Service, Unified Communications as a Service, um and productized with those organizations, sorts companies we're talking about here. Many of them are are US headquartered, multi-billion dollar organizations like Genesis, RingCentral, Zoom, these sorts of organizations. And PCI Powell is often the preferred provider to those companies. And and we we put in a lot of effort to to reach that that kind of status that we have. um And yeah, we're at a really exciting time with the business and we've got a good update going out shortly.
Year-End Trading Highlights
00:02:51
Speaker
So you've just announced your year-end trading update and alongside that, you've put out your new three-year strategic plan. If we just start with the trading update, could you give us the highlights from that?
00:03:02
Speaker
Yep. So ah good year for the business. i'm Really happy with with the performance. In terms of growth with PCI Power, we tend to focus predominantly on ARR. And our ARR growth organically is 25% year on year. So really happy with those sorts of growth levels. You know, we are the fastest growing company in our market.
00:03:23
Speaker
it's a fairly niche market, quite specialist, but we are the fastest growing. But when we look at peer groups on AIM, et cetera, I think we're in ah a good place in terms of AOR growth. um We also consider a metric called CAR, which is contracted annual recurring revenue. and Those that know us will notice the rebrand there. That metric we used to refer to as TACV, so total annual contract value.
00:03:47
Speaker
The difference between CAR and ARR is effectively that CAR has included within it contracts that are not yet at revenue recognition. So um CAR at the 22.2 million it came in at is a really good future indicator of what um recurring revenue is going to look like, you know, six to 12 months down the track. So we've got a good line of sight of that coming through.
00:04:09
Speaker
um In terms of top line revenue, group revenue, and you know what's in the market forecasts, we've we've got reached expectations in the year for top line revenue that we've recognised across the group um and adjusted profit before tax as well at just south of of a million, which is very much in line with the plans for the year.
00:04:28
Speaker
Outside the side of those kind of key sort of financial metrics, um the the customer retention continues to be very strong within the business. So our our ah gross revenue retention um up up at north of We're consistently between So very sticky customers.
00:04:50
Speaker
um Probably most encouraging for me when we look at operational metrics within the business is the net revenue retention that we've reported, which we've seen an increase from 102% last year to 104%. And actually, I've ah yeah i've talked to investors a number of times, given our strong retention that we have,
00:05:07
Speaker
I see a big opportunity with NRR for this business. And how do you drive NRR up further? If you've got strong retention rates, you need to sell more to your existing customers. So either expansion sales or cross sales that we're making.
00:05:20
Speaker
And predominantly in the past, most of our additional sales that we make to existing customers are expansionary sales. and But with the evolution of our product roadmap and broadening of the value proposition that we've got, we do expect that ah over the next three years, we'll be able to see a steady increase in that NRR going up, which will drive further long-term value to to shareholders.
Strategic Plan Motivations
00:05:42
Speaker
And that leads us neatly into the three-year strategic plan that you've talked about in this release. Can you give us a bit more detail on the motivations behind that, kind of what growth expectations you have and what it also means for your profitability and cash flow?
00:05:57
Speaker
Yeah, so if if you let me see and set a little bit there. um So ah if you look back at PCI Powell's history, prior to starting this year for three years, we were battling patent litigation with a yeah competitor of ours.
00:06:12
Speaker
um There's a whole load of history there, but but we won in short. so But we settled what remained of the case, having won in the courts in the UK in just June last year, actually.
00:06:23
Speaker
um And that was a big burden on the business, both cash drain, real distraction for management as well. um And so when we came into this financial year, the plan was to carry out a full review of that rolling three year strategy that we've got.
00:06:39
Speaker
And then around that time as well, we also went through a transition of CFO. So I had a new CFO, Ryan Murray, join me in just October time. So actually, by the time we'd, you know, we'd come out of the patent case, um we'd hired the new CFO, we were really getting to the end of our r h one And so when I was seeing investors through the year, I was talking to them about our plans for the full refresh of the three year plan. um In fact, I didn't really need to tell them because many of them were saying, right, now you've got that monkey off your back. What's what's next? Where are we going next?
00:07:09
Speaker
um And so, um you know, that that came into play when we're considering the growth objectives for the business. Now, we have cash in the bank um and, you know, we take a prudent view on that. um We don't want to go back to a position where we're perceived to not have enough cash.
00:07:24
Speaker
um But also we want to move quickly. You know, in ah in in in any SaaS market out there, you can't stand still. um We feel that what we've achieved to date has been a real success and we think there's more that we can do.
00:07:37
Speaker
ah You know, two of our major competitors are in private hands now. um and And so we can assume that the market's going to move quickly and we need to move quickly as well. And so having reviewed those plans, we've made a decision that that that we want to invest further in the business. um I would say fairly prudent investment in the business um around the level of around one and a half million in cash investment out of that effectively to be four million that we have at the end of the year.
00:08:03
Speaker
and We actually anticipate across FY26 when we're going to spend most of that cash that will be borderline cash flow neutral. Okay. So we think, you know, from a risk perspective, we think it's a very calculated one to do that. We've got super high customer retention. We're not going lose our customers overnight.
00:08:18
Speaker
And we think that's a good use of those funds um for investors. And we think we could really see value from that over the next three years.
Investment in Growth and Innovation
00:08:26
Speaker
ah And particularly important to us is that we keep growing that ARR organically.
00:08:31
Speaker
um And how can we do that in the region for 18 to 20% year on year, not just in but And we're looking beyond that too um And to achieve that organically, you know it's it's um yeah i remember the day i remember the days not that long ago when your million revenue is a lot easier to grow revenue by fifty sixty Once you start hitting 25 million in revenues, then it does become more challenging. And so keeping revenue growth at those sorts of levels um does require investment and it requires pace.
00:09:04
Speaker
um And there's an element at play here where during that patent case and that three years of a four million cash strain that we had, um we had to pull some things back in as well. So to a degree, there is some, I'm not sure a catch up is the right term, but really getting fully back on the front foot is what we want to do.
00:09:25
Speaker
um and And in terms of how we're using those funds, um marketing is actually quite a big part of that. um And i've I've spoken to our investors about the fact that we did, you know, we publicly said we reined our marketing spend in during that three years and we're looking to sort of re-accelerate that.
00:09:44
Speaker
um We've kept our marketing spend relatively flat for the last three years, which is highly unusual for a fast growing business that tracks, you know, marketing to ARR. The ARR has been going up, the marketing hasn't. So proportionally, it's low.
00:09:57
Speaker
um And the exciting thing about that is that that's opportunity. You know, I'm not talking about spending money to correct problems. I'm talking about spending money to drive sustained growth, to create more opportunities for the business, to get new product to market quicker.
00:10:12
Speaker
And so there is an element of that investment as well that goes into the engineering side of the business, but predominantly it's the marketing and product marketing side. um And yeah as say, cash about one a million is about two thirds of that would actually impact the FY26 P&L.
00:10:28
Speaker
So touching on product again. So how do you adapt to changes in customer behavior and also payments technology? You know, so, for example, people using more self-service payment channels, interacting with chatbots, making more non-card payments. um How does that inform your product roadmap?
00:10:48
Speaker
So ah for a number of years now, we've been releasing enhancements to our core ah key to pay, click to pay and speed to pay offerings. So for a number of years now, those solutions have been used with not just credit and debit card payments, but numerous different types of digital payments. So um Very common for our click-to-pay solution, for instance, take payments via Google Pay or Apple Pay.
00:11:12
Speaker
and We have customers using open banking payment methods as well. So um we've been evolving that anyway. And actually by doing that, we've been bringing those kind of e-commerce type digital payments to contact center environments for the first time.
00:11:27
Speaker
And so, um you know, to a degree, we've been doing that anyway, and it's been informing the roadmap for for quite a long time. PCI-PAL's original value proposition was very focused on compliance and security. um But in line with what we've been doing with the product roadmap, we also facilitate payments. You know, we're often the party that is actually making a payment possible.
00:11:50
Speaker
So we're making that transaction between that merchant company and that consumer possible across that web chat session or across that social media interaction ah with that chat bot, with that voice bot that we're now starting to do as well.
00:12:04
Speaker
And we do that in such a way, as I said at the very beginning with my intro, that is nicely and tightly integrated to that environment within which it exists, which operation is super important for companies that run band contact centers.
00:12:17
Speaker
So we can do it in such a way that makes sure that all the data reporting is reconciled to the right place, that the CRM is updated, and that information to the business communications platform is updated as well. So we're we're already providing a level of value across that. Now, in terms of um the product roadmap, um I would say that the ah The first question on many investors' lips, but also the big the big kind of change that is coming into all of our worlds, whether it be a worker at home, but within contact centers as well, is AI.
Conversational AI in Business Communications
00:12:52
Speaker
And in particular in our space, um the terminology is conversational AI. And conversational AI is effectively voice bots and chat bots. um and And the very plain message from PCI Pal, but it's it's definitely not the complete message, is that we don't care whether it's a human agent or whether it's a bot.
00:13:12
Speaker
We carry the same value proposition for either, potentially. um And so across the year that we've been working, we we already work with a number of conversational AI vendors. There are hundreds of them cropping up all over the place at the moment. So actually selecting the ones you want to work with is part of the challenge.
00:13:30
Speaker
And actually, we've tended to focus our efforts on conversational AI with ah with where our partners are going. um You know, the CCAS platforms are facilitating a lot of these interactions across ah the global contact center solutions market. And we're seriously well positioned with those organizations.
00:13:50
Speaker
And so we've been integrating with our partners conversational AI products. with third-party conversational AI products that they have partnered with themselves. And we've got numerous customers out there now that are using PCI Power Solutions, both um for speech recognition payments with voice bots, but also through digital payments, so text and chat bots, effectively. And so um the conversational AI piece is quite interesting. um It's one where we think that we're in ah in a very strong position with. um
00:14:26
Speaker
It's happening slower than perhaps some would anticipate. um There are very few payments going through conversational AI platforms today is our view. um I say that quite cautiously because I think there's an yeah when new technology comes into a market, you know it's easy to say, well, it'll always take longer than everyone thinks. I think AI is a bit different.
00:14:47
Speaker
um But we are fully immersing ourselves in the direction of travel that that is taking. We're completely integrated to the majority of those CCAS markets who are facilitating a lot of those conversations, whether they be human or bots, we're really well positioned to be part of that. And we're making ourselves really easy to work with on the technology side of things so that these conversational AI platforms can can work with PCI power. So um the The contact center market, I think we've referenced it in the trading update, is set to grow by the solutions market around it is set to grow by six to seven times over the next eight years.
00:15:23
Speaker
a A part of that will be conversational AI interactions. And we fully intend to be part of that. And we believe strongly that our value proposition is pretty much the same for a conversational AI vendor.
00:15:37
Speaker
as it is for a CCAS vendor today. And if we had more time, we could talk into the detail of, you know, specifically why that is, but that's our view.
Strengthening Partnerships and Expanding Sales
00:15:46
Speaker
Okay. And actually talking about the partner channel, and the majority of your contracts and and contracts by value and number are one through the your channel partners.
00:15:56
Speaker
Are there any other kind of large vendors out there that you still want to sign up? And can you also give us an update on some of the more recent partners that you signed up? So, for example, RingCentral and Zoom. Mm hmm. Yeah, so um we've been very successful in building our partner ecosystem. We've been super targeted about it. It's been very purposeful. We've built our whole business with with a a strong focus on channel, you know, right down to the people we hire in the business. It's really, it's ingrained in everything we do. And I think that's important. It's been an important part of our success.
00:16:29
Speaker
What that has meant is that we already work with a lot of the, you know, the key players in this space internationally. And so, you know, when I talk to the business, the the first point we're normally thinking about is not um who's the next partner we're going sign, but it's what do our relationships look like with our existing partners? What more can we do with our existing partners?
00:16:53
Speaker
These organizations, many of them are very large, you know, they're five, 10,000 plus employees across numerous different countries. And to a degree with many of them, we're just scratching the surface. So um that's kind of the starting point before we go running off signing more partners. It's it's easy to sign a reseller agreement, frankly. It's more about actually enabling that partner, being productized, onboarding the partner, sales enable, et cetera, and everything that goes with it.
00:17:19
Speaker
um Yeah, we have targets though going into the year. um We think carefully about who those organizations are, how we're going to get into those organizations, where the best place to do that is.
00:17:30
Speaker
um There are, we have some relationships on the CCAS side, which are not full OEM type reseller relationships yet. None of the ones I've mentioned, they're all resale, but there's one or two others on there and we fully intend to move to a different sort categorization of partnership with those organizations.
00:17:48
Speaker
um And then you've got um some new partners coming through. You know, we referenced in the trading update, we signed RingCentral in the year, which we'd already announced, we're seeing some great momentum there. It looks like a really good partnership for us. um We've also signed another new billion dollar revenue, US s headquartered corporation who's in the business communication space.
00:18:08
Speaker
They've recently launched a CCAS product to go with their established UCAS and meetings product set that they've got. So we've been successful in signing them there. um So we you know we have a pipeline with with new partnerships in there and we think carefully about it. Some of those will be related to existing relationships that we've got and expanding those or getting a better level of commercial um contracts in place with them.
00:18:35
Speaker
um But then there are others in there that are completely net new. And particularly, we are looking at organisations who are strong in the business communications and contact centre space. And just to be super clear on the contact centre point, that includes conversational AI.
00:18:50
Speaker
So when when we talk about contact centres today, as humans and bots, it's the same same thing. And kind of last but not least, what's your direct sales strategy? So our direct sales strategy um actually feeds our channel strategy as well. So a lot of the time with our direct sales strategy, ah direct direct marketing strategy, if you like, um we're actually marketing to our partners' customers as well.
00:19:13
Speaker
So our our kind of default position is that we'll normally try to fulfill and opportunities as they come through directly through our partner ecosystem. That is the way to run a healthy channel business.
00:19:27
Speaker
um And because we've got such an extensive partner ecosystem covering so many of the CCAS vendors that are out there, you know more often than not, we're able to actually do that. And then that's to the benefit of that that relationship.
00:19:40
Speaker
Where we are signing kind of net new direct business, it tends to be more larger contracts ah because it will be organizations who want to deal directly with the supplier.
00:19:52
Speaker
um And that tends to be more um suited to large central government and or large enterprise type organizations. You know, our two largest, two of our largest customers who in the UK are HMRC, who we all know very well, and the Department for Work and Pensions as well, who in the year we retendered and successfully won that that contract. But that was one direct contract.
00:20:20
Speaker
um And so, ah you know, these sorts of organizations like to work directly with with PCI Power. Now, thinking about the strategic plan going forwards, the investment that we'll be making in marketing, an element of that will be looking to light a fire under our account based marketing strategy. So, um you know, how do we attract more of these enterprise businesses?
00:20:41
Speaker
As say, we're quite happy to fulfill them through partners. and But we want to get ourselves in front of more of those organizations because um we we're very we've been we've done very well at scaling the business on um kind of mid-market size business.
00:20:56
Speaker
And the majority of the contact center market is small to mid-market. So that's the breadth that there's the majority of the market that's out there. But we recognize that if we can sign more of these enterprise customers, which we've become, it's become a real strength of ours over the last few years, we sign more of those, then it does kind of supercharge that ARR uplift and maybe make life a little bit easier for us to a degree. And so very much it's focused on ABM, account-based marketing and enterprise strategy. but at the same time, it does complement what we're doing with Channel
Key Performance Metrics and Future Goals
00:21:27
Speaker
Partners.
00:21:27
Speaker
And finally, to wrap up, what KPIs should investors look to to track how the business is doing? Yeah, so mainly the KPIs I've talked about already.
00:21:38
Speaker
um So ARR and CAR. um CAR, the reason we changed the name for that, by the way, is that the gap is closing between CAR and ARR. So, yeah know, it's not around the corner, but the the day is coming where that gap will be so close, you know, at some point in the years to come, where actually we think that that's more the metric that the business should be valued on longer term. And that's more traditional SaaS.
00:22:03
Speaker
um And that's one of the reasons we changed the name of it was because we wanted to have a direct and clear correlation to ARR, which is effectively what it is. So ARR and car, um ah clearly very important.
00:22:15
Speaker
um You then have those operational metrics around our retention and our ability to um cross sell and expansion sale to our existing customers. So of gross revenue retention and net revenue retention.
00:22:30
Speaker
um Rather than talk about profitability next, talk about cash. um So, you know, yeah using our cash efficiently balanced with the growth opportunity that we've got. um You know, I talked about the fact that we do actually expect to be cash flow neutral in this year of investment that we've got coming in front of us.
00:22:48
Speaker
And I know that will be important for investors. And then we believe over time we can start to see us get to a position where we can start to generate much more positive cash flow into the business that then can potentially create more opportunities um for us down down the track.
00:23:03
Speaker
um And then outside of that, it's you know not one we report publicly as such, but you know we think about all the faulty within the business. um Rule of 40 is more challenging when you're a ah ah growing business and you're investing for growth.
00:23:16
Speaker
um And there's some other metrics out there like rule of X, et cetera, that you can use. But rule of 40 is certainly something we look at as an internal metric. And we're particularly looking at that when we're looking at long term where the business is going to get to. And I think, you know, after this next three years, that's where rule of 40 really kicks in for us. And that's where we think we'll be able to get to a rule of 40 company. But you know, who knows what opportunities are going to come our way, you know, quarter to quarter, year to year um as we go.
00:23:45
Speaker
But yeah, i would say they're the they're the main metrics. Okay. Well, thank you very much for coming in. Thanks for having me.