H113 results from postal sector point-of-sale specialist Escher Group Holdings make interesting reading. With a 48% increase in revenue to $12.9m for the six months to June 30 2013, the company appears to be roaring ahead. The increase was mostly due to the massive United States Postal Service (USPS) win in 2012 (see Escher scoops deal bigger than itself) however. It is great that this contract is generating revenue but it does underline how reliant Escher is on one customer, even though the contract is worth over $50m over a 15 year term. It does give it revenue visibility though.
Costs are rising at Escher as it executes on its wins, adds headcount and invests in product and market development, so PBT was slightly down at $1.08m vs. $1.15m (operating profit: $1.36m vs. $1.44m) but there is nothing alarming here as this is a company in growth mode and adjusting to major change in its market. In fact, the company illustrates how suppliers can find opportunity even if their core market is being disrupted. While continuing to find new and renewals business with its core point-of-sale postal software, Escher is also taking advantage of moves to retail/mcommerce, egovernment and community based message solutions as the ‘postal’ sector becomes more digital and diversified. Tenders are coming in and Escher is well placed to respond.