emersion software systems acquisition · 4/2/2020 · fintech banking services payments subscriber...

NOVATTIGROUPLIMITED(ASX:NOV) 02APRIL2020

I N N O V A T I O N F O R P A Y M E N T S

EmersionSoftwareSystems Acquisition

SUBSCRIBER BILLING PAYMENTS FINTECH BANKING SERVICES

ThisdocumenthasbeenpreparedbythemanagementofNovattiGroupLimited(Company).Theinformationisbasedonpubliclyavailableinformation,internallydevelopeddataandothersources.Whereanyopinionisexpressedinthisdocument,itisbasedontheassumptionsandlimitationsmentionedhereinandisanexpressionofpresentopiniononly.Theinformationinthisdocumentisanoverviewanddoesnotcontainallinformationnecessaryforinvestmentdecisions.Inmakinginvestmentdecisionsinconnectionwithanyacquisitionordisposalofsecurities,investorsshouldrelyontheirownexaminationandconsulttheirlegal,businessand/orfinancialadvisers.TheCompanydoesnothaveasignificantoperatinghistoryonwhichtobaseanevaluationofitsbusinessandprospects.Therefore,theinformationcontainedinthisdocumentisinherentlyspeculative.NowarrantiesorrepresentationscanbemadebytheCompany,itsdirectorsoremployeesastotheorigin,validity,accuracy,completeness,currencyorreliabilityoftheinformation.TheCompany,itsdirectorsandemployeesdisclaimandexcludeallliability(totheextentpermittedbylaw)forlosses,claims,damages,demands,costsandexpensesofwhatevernaturearisinginanywayoutoforinconnectionwiththeinformation,itsaccuracy,completenessorbyreasonofreliancebyanypersononanyofit.ThisdocumentmaycontainstatementsrelatedtoourfuturebusinessandfinancialperformanceandfutureeventsordevelopmentsinvolvingtheCompanythatmayconstituteforward-lookingstatements.Thesestatementsmaybeidentifiedbywordssuchas"expects,""looksforwardto,""anticipates,““targeting,”"intends,""plans,""believes,""seeks,""estimates,""will,""project"orwordsofsimilarmeaning.TheCompanymayalsomakeforward-lookingstatementsinotherreports,inpresentations,inmaterialdeliveredtoshareholdersandinpressreleases.Inaddition,Companyrepresentativesmayfromtimetotimemakeoralforward-lookingstatements.SuchstatementsarebasedonthecurrentexpectationsandcertainassumptionsoftheCompany’smanagement,andare,therefore,subjecttocertainrisksanduncertainties.Avarietyoffactors,manyofwhicharebeyondtheCompany’scontrol,affecttheCompany’soperations,performance,businessstrategyandresultsandcouldcausetheactualresults,performanceorachievementsoftheCompanytobemateriallydifferentfromanyfutureresults,performanceorachievementsthatmaybeexpressedorimpliedbysuchforward-lookingstatementsoranticipatedonthebasisofhistoricaltrends.TheCompanymakesnoundertakingtoupdateorrevisesuchstatements.Duetorounding,numberspresentedthroughoutthisandotherdocumentsmaynotadduppreciselytothetotalsprovidedandpercentagesmaynotpreciselyreflecttheabsolutefigures.

Disclaimer–ImportantNotice


EmersionisaleadingproviderofCustomerEngagement,Payment,ProvisioningandSubscriptionBillingsolutions.

Emersionempowersteamstoworkremotelyandsecurely,helpingthemEngagetheircustomers,IntegratetheirsystemsandAutomatetheirbillingandpaymentprocesses.

EBITDApositiveandgrowing

•  EBITDApositive•  PotentialtogrowtransactionrevenuewithminimalinvestedfundsinfusionfromNovatti

•  Generatespredictable,cumulativeandstablesubscriptionrevenues

•  Attractivelypricedatapprox.2xAnnualRecurringRevenue(ARR)

Synergisticoperations

•  BuildsonNovatti’sTransactionsDivisionoffering•  EstablishedcustomersinAustralia,NewZealandandSingapore

•  Significantgrowthpotentialinexistingmarkets(APAC)andoverseas.

•  Acquisitionbringsadditionalintegration,paymentsandsubscriptionmanagementskillsandexpertisetoNovatti

•  FollowsNovatti’s2017acquisitionofbasis2billingsoftwarebusiness

ACQUISITIONRATIONALE


Seller EmersionSoftwareSystemsPtyLtd

Natureofoperations •  RealTime–Subscriptionbilling,provisioning,paymentsandbusinesssupportsoftwareplatform•  Partnershipswithleadinginternationalsoftwarevendors-Salesforce,XeroandConnectWise•  Developingintegrationstoleadingmarketplaces–RhipeandIngramMicro•  CustomersincludeDatacom,SimplyEnergy(NZ),FrontierNetworks,DataExpress,Whiz(SG),

Natureofrevenues •  >80%recurringrevenue(resilienttoCOVID-19scenarios)•  Diversifiedcustomerbasewithmorethan70customers•  Highly“sticky”duetoefficienciescreated(e.g.automatingtheentirepaymentprocess)•  Lowcustomerattrition

Growthprofile •  Existingclients–potentialforincreasedrevenuefrommoreactiveaccountmanagement•  Leveragingkeyglobaldistributionpartners–ConnectWise&Salesforce•  ExpandinginAsiaPacificRegion(AU,NZ,SG)•  NewpotentialinternationalmarketsincludingEuropeandUS,UKandCanada•  Growthtodatehasbeendrivenbywordofmouth

OPPORTUNITYOVERVIEW


Emersionprovidessubscriptionbilling,paymentsandprovisioningcapabilitytoManagedservicesproviders(MSP's),Independentsoftwarevendors(ISV's),Systemintegrators(SI's),UtilitiesandTelco's,withintegrationtoCRM,professional

servicesautomationandconfigure,price,quote(CPQ)tools.

Emersion’sgo-to-marketstrategy

•  StrongvendorrelationshipsinAsiaPacificRegion.•  Inboundmarketingtodriveleadgeneration

•  PartnershipwithConnectWisewhichisusedbymorethan970MSPsintheANZregion(Source:ConnectWise)

•  ExploringpartnershipswithValueAddedDistributorsIngramMicro(‘Theworld’slargestdistributorofcomputerandtechnologyproducts’)andRhipe(‘TheCloudCompany’)

•  PromoteintegrationstoXEROandSalesforce

Marketsegmentthematic

•  Fundamentalconnectionwiththegrowthofthedigitaleconomy

•  Thismarketsegmentisexperiencingdigitaldisruption,movingawayfromcapitalexpendituremodeltowardssubscriptionandconsumptionmodels

•  Productandservicesalesprovidedonsubscriptionneedflexibleprovisioning,billingandpaymentssupport

MARKETSEGMENTDEFINITION


INTEGRATION AUTOMATE ENGAGE

EMERSIONOVERVIEWEmersionintegratesdiversebusinesssystems(e.g.Accounting,PaymentGateways,Suppliers,VendorsandInternalSystems).

Thismeansthatmanualandtimeconsumingprocesseslikesubscriptionbilling,invoicing,paymentprocessing,collectionsandreporting

canbeautomated.Thisincreasestheamountofresourcesavailableinabusinesstofocusoncustomerengagement,andresultsina

bettercustomerexperience,aswellasincreasedbusinessprofitability.

Emersion’sadvancedpaymentsystemmeansthatcustomerscanpaytheiraccountsbymultiplemethodsincludingcreditcard,EFT,bank

transfer,directdebitandBpay.Invoicescanbesettogooutautomaticallyatafrequencychosenbythecustomerorsentonanad-hoc

basis.Emersioncanbeconfiguredtosuitanyproductorservice,includingbundledsubscriptionandusagebasedservicesandproducts.

COLLECT

VALUECREATION


ENGAGEMENTTOSUPPORTAPOSTCOVID-19WORLD Detailed invoices make it clear exactly what products and services a customer is paying for.

DETAILED INVOICES

Self service portals make it easy for customers to view and pay their bills, and make changes to

their account details and their subscription.

SELF-SERVICE PORTALS

Invoices and self service portals can be customised to match the look and feel of a company’s

brand, providing a more consistent service offering.

BRANDING

The time to process orders while a customer is in store or on the phone is greatly reduced

through Emersion.

QUICKER ORDER PROCESSING

Less data entry and automated internal processes mean fewer errors. This results in a better

customer experience and less work staff.

FEWER ERRORS

Staff have to do less manual work, and receive fewer enquiries from customers, meaning that it is

easier to service a growing customer base.

BETTER RESOURCE MANAGEMENT

Ability to log tickets for support and changes to their service.

TICKETING

^ ^

^ In Progress Integration


Full margin analysis against all billing objects in the system. Auditing is real time and automated.

AUDIT & MARGIN ANALYSIS

8

Emersion’s diverse integrations, sophisticated workflows and automations mean that customers

are billed for all products and services on their account.

REVENUE ASSURANCE

Emersion supports Payment Gateways in multiple countries and currencies. The system can

store and tokenise cards allowing the service provider to change payment vendors easily.

PAYMENT GATEWAY AGGREGATION

Events and notifications can be sent out if a customers account is overdue. These can be sent to

customers or internal staff.

Emersion supports online payment methods including one off payment methods (Credit Card,

EFT and Bpay) and subscription payment methods (Credit Card, Direct Debit)

ONLINE PAYMENT

Emersion’s billing is in real time. Clients have control over when they bill their customers (up to

28 times per month) and can also send ad-hoc invoices when needed.

REAL TIME BILLING

Emersion supports complex products and services, including usage based products. Multiple

products and multiple services can be combined together into bundles.

COMPLEX USAGE & RATING PACKAGES AND BUNDLES

PAYMENTGATEWAYS

SupportedpaymentgatewaysintheAPACregioninclude:GLOBAL•  Stripe•  Wirecard

AUSTRALIA•  ANZBankeGate•  CommbankbPoint•  E-matters•  IntegraPay•  Ezidebit•  SecurePay•  StGeorgeBank•  WestpacPaywayInstantCreditCard•  ABAFileProcessing

NEWZEALAND•  Westpac•  ASBBank•  BankofNZ

SINGAPORE•  DBSGiro

EVENTS AND NOTIFICATIONS

BILLING&PAYMENTS


Solutionsuitableforallproducts,allmarkets,multi-tier

•  Uniqueindustryandproductagnostic•  Subscriptionbilling,servicemanagement,provisioning•  Singleportal,deliveredbyAWSCloudservice•  Keypartofclient’snewdigitaleconomyofferings

Growthdrivers

•  Alignswiththeglobaldigitaltransformationtrends•  Demandenhancedviakeyglobalreferralpartner•  PaymenttechnologiesprovidevalueaddedopportunitiesinNovattimarkets•  Gartnerconsultingoninternationalandproductstrategy

Targetmarketsizing

•  Approximately11,100MSPsinANZregion•  RhipeintegrationissuitableformostMSPsinAPACregion•  PartnerConnectWisehave24,000+globalcustomers–770+inANZ•  CanleverageNovattiinternationalmarketpresence•  Smallmarketshareinstronglygrowingmarket

Highlydesirableserviceoffering

•  Essentialbusinessrequirementforhighgrowthmanagedservicebusinesses•  Createsefficiencies,productivity,andenablesclientstofocusontheirtargetedmarketsegmentwithsalesefforts,notbackroomadministration

•  Solvesindustrypainpointsincludingintegratingsubscriptionbillingintotheiroperations,acceptingonlinepaymentsandcustominvoices

GROWTHMODEL


Sales&Distribution•  BolstersboththeNovattiandEmersionplatformsalescapacity•  ExpandsNovattisubscriptionbillingandpaymentssalesoperationsandreach•  Leveragescurrenteffortsofmanagementtobuildbillingrevenues•  Costefficientoverheadswithbothlocatedincloseproximityandtargetingbillingandpaymentsopportunities

TechnicalTeam•  Smallspecialistteam•  SimilaroperationalsupportmodeltoNovatti•  Novattiunderstandsthetechnologyandcansupport

Culture&Management•  FitsNovatticulture•  FitsNovatticustomermanagementmethodology•  Buildsmanagementexpertise•  BuildsoverallNovatticapability

HIGHLYSYNERGISTICACQUISITION


EmersionPaymentSystem•  SpecificsynergiesforNovattifromEmersionpaymentcapability•  Interfaceswithvariousbanks,cardprovidersandotherpaymentservicesprovidingaPaymentGatewayfacility•  Allowsforstorageofpaymentinformationandcollectionofpayments•  Manual/userinitiatedandautomatedpaymentmethods

Paymentplancapability•  Supportsvariouspaymentplans•  CreditcardsandBankAccountsdebitedwithoutmanualentryofeachtransaction(realtimeorbatch)

Automatedpaymentmethods•  Directdebitfromabankaccount.•  Creditcards(VISA,MasterCard,Diners,AMEX)•  BPayBillercodeandReferencenumbergeneration/storageperaccount

PAYMENTSCAPABILITY


Revenue $1.71m

$1.43mrecurringrevenue(>80%)

EBITDA $0.3m

Cashflow Cashflowpositive

Headofficelocationandterritory

BourkeStMelbourne

ClientsinAustralia,NewZealandandSingapore

Noofstaff 13

FINANCIALSFY19ACTUAL


Multiple:2xARR

Transactiontype:Assetpurchase

Enterprisevalue:$2.6m

Consideration•  Shares– 16,725,000shares

•  Cash– $1,000,000inmonthlypaymentsuntilJune2021

Transition&Integration•  Boltonacquisition•  Culturalalignmentfacilitateseffectivetransition

•  Managementoverhead–low,strongcontributorstodailyoperations

SavingsandGrowth•  Strongtechnologyandstaffingsynergies•  Stronghighgrowththematics–automation,digitaltransactions,subscriptionsservices

•  Accumulativerecurringrevenuesgrowth

TRANSACTIONOVERVIEW

ARR–AnnualisedRecurringRevenue


GrowthopportunitiesConsiderablegrowthpotentialinAustralasianmarketandpotentialtoexpand

internationally,particularlytoleverageNovattiinternationalpresence

RevenueCirca$2mwithsignificantpotentialforfurthergrowth

NovattiRevenueEnhancesongoingrevenue

growth

CashflowPositivecashflow.

APACpresenceLocalMelbournebasedbusinesswithAPACclient

profile

Recurringrevenue>80%ofrevenueisrecurring

SynergySavingsLowandtobereinvested

forgrowth

COMPELLINGVALUEACQUISITON


CONTACT

PeterCookChiefExecutiveOfficer&[email protected]|+61411111153PeterPawlowitschChairmanpeter.pawlowitsch@novatti.com|+61419299302

www.novattigroup.com

emersion software systems acquisition · 4/2/2020 · fintech banking services payments subscriber...

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