Thread by @stocks102

THREAD: 5 reasons why this £5.5m fundraise is good news for PCI-Pal #PCIP (market cap: £65m; share price: 98p)

PCIP has announced a £5.5m fundraise today (30 April). As a reminder, PCIP sells, via the cloud, niche software to call centres. This software ensures the call

centres can’t lose customers’ credit card details. If the call centres did lose these details, they’d be fined up to 4% of turnover under GDPR rules. So PCIP’s software is mission critical.

Here are 5 reasons why the fundraise is good news in my view:

1)The fundraise is so that PCIP can sell their product to three new territories: Canada, Australia & Mainland Europe. Together these three territories expand PCIP’s addressable market by some 40%.

2)House broker finnCap has raised eps substantially as a result of this move.

2025 PBT goes up by +82% to £6.2m. And 2026 PBT goes up by +150% to £11.0m. This should mean 13p of eps for the year to June 2026.

3)PCIP is spending the money raised on new sales people who will live in these three new territories. Because of this spend, the first year of

profit for PCIP moves out from 2023 to 2024. In a call with management, they told me they are now already generating cash on a monthly basis. So this fundraise is not to plug a hole in the finances. In fact, it is for the opposite reason: it is to accelerate growth and hugely

boost eps medium-term.

4)PCIP is already selling into these three new territories via its global sales partners, like Salesforce, so the model here is proven. The new money raised will accelerate this growth by getting new PCIP salespeople to ensure Salesforce etc are pushing

PCIP’s offering harder into these new territories.

5)Most importantly, by raising this money now and pushing into these new territories now, PCIP is cementing its competitive edge over rivals. As a reminder, PCIP has the only cloud-based offering. This means PCIP’s large

sales partners, like Salesforce, all of which are also cloud-based only, want to work with PCIP but not with PCIP’s rivals.

Because 90% of the call centre market consists of small call centres (i.e. having under 250 call centre agents), there is no economical way to reach

this 90% of the market – unless you are 100% cloud-based (so you don’t have the cost of installing physical hardware on premises), and unless a sales partner, like Salesforce, sells your product as part of a larger suite of products. So having the sales partners onside, is key.

Hence PCIP has a huge lead over rivals.

Finally, customer churn remains at less than 3% for the whole business. This is a very sticky product, with the average contract costing c. £20,000 per year, which works out at £1.5k per month or so for, what is effectively, insurance.

Insurance that customers’ credit card details won’t leak. Almost 90% of PCIP’s revenue is recurring.

I don’t see why PCIP won’t trade on a P/E of 30x or higher by 2026, which would equate to a share price of (30 * 13p) = 390p.

When I wrote up the buy case a few weeks ago

in a separate thread, two people on twitter asked me the following two questions. So I put them to management:

a) Q: Do you own your IP? A: Yes.

b) Q: If you are cloud-based, why does it take months to install the product? A: Because we work with sales partners, we install

our product as part of a suite of many other products offered by the partner to the call centre. We can’t switch on our product until the partner has install their products too. This is what takes time.

/ends