Last month (23 August), Australia-based Software-as-a-Service construction collaboration software vendor Aconex announced its financial results for the year to 30 June 2016, revealing underlying organic revenue growth of 31%, with the acquisition of Conject (completed on 31 March 2016) boosting total revenue growth to 50%.
Total Aconex revenue was Au$123.4 million (c. US$93.3m, £70.1m, €82.8m), compared with Au$82.4 million for 2015. The revenue increase reflected strong organic growth and the contribution of Conject sales for the fourth quarter.
Aconex declared a pre-tax profit (EBITDA) of Au$13.6 million (c. US$10.2m, £7.7m, €9.3m), up 350% from 2015’s Au$3.0m, excluding acquisition and integration costs. Including costs of Au$4.1 million related to the acquisition and integration of Worksite (July 2015), the CIMIC Group’s INCITE Keystone collaboration platform (August 2015), and Conject, the EBITDA for 2016 was Au$9.5 million.
Aconex CEO Leigh Jasper said:
“Our financial results for FY16 demonstrated strong fundamental performance, driven by the consistent execution of our growth strategy. We continued to expand our global user network by winning new business from both new and existing customers, and to move existing customers from project engagements to enterprise agreements. We completed three acquisitions to further increase the value that we deliver to customers and consolidate our leading market position worldwide. With these acquisitions as well as organic sales momentum, we continued to scale the business for significant growth in profitability. The US$10 trillion construction industry is going digital, and we are at the centre of this digital transformation, connecting people and data to build the world’s infrastructure.”
Aconex reported profitable growth across all regions, with Australasia up 35% to Au$48.8m, compared with $36.2m in 2015. Revenues from the rest of the world were up 61% to Au$74.6m (2015: $46.2m). for FY15. Looking at specific regions, the acquisition of Conject had a significant impact on Aconex’s revenues, particularly from Europe and the Middle East, which were up 87% from Au$21.3m to Au$40.0m (excluding Conject, EMEA revenue growth was 31%). Revenues from the Americas were up 45% from Au$14.7m to Au$21.3m (excluding Conject, growth was 35%), while Asia revenues were up 30% (excluding Conject, 19%) from Au$10.2m to Au$13.3m.
In Aconex’s 2016 Annual Report, Jasper highlights opportunities arising from the increasing digitisation of construction, and talks about the company’s latest enterprise agreements (2016 saw deals with Fluor Corporation, ExxonMobil, and Burns & McDonnell – all strong US-based businesses – on top of similar deals done in 2015).
After Conject, more acquisitions
He also comments briefly about progress on the Conject acquisition (bought for a total cash consideration of Au$99.5m [c. US$75m, £56.5m, €66.8m), financed by a Au$120m institutional placement):
“The integration is tracking well. Staff and customers are engaged, and our key operational systems, processes and policies are aligned. The Conject and Aconex cultures are highly complementary, and we look forward to what we can achieve as one company.”
The Australian Financial Review reports (Aconex boss tips tech sector to become more dominant on the ASX)
Jasper said the company would probably make more of these sorts of acquisitions in 2016/17:
“There is a lot of work still to integrate Conject, but we are still in a range of discussions with companies, especially around technology bolt-ons. But in terms of large acquisitions, we’re focused on bedding down Conject and then we’ll look at what we want to do longer term.”
Smaller acquisitions could be financed from existing resources, he said, but another heavyweight takeover would be a different matter, The Australian reported. “Clearly if we were to do more acquisitions we’d need to go back to the markets, but we’ve got $50m on our balance sheet and we’re generating cash.”
Stock market analyst reaction to Aconex’s results varied from cautious to bullish (reported Motley Fool Australia). Credit Suisse analysts cut their recommendation on Aconex to ‘neutral’ from ‘buy’, citing concerns over the company’s guidance (Jasper’s medium term view is of revenue growth of 20% to 25%, and an EBITDA margin between 11% and 16%). Citi, on the other hand set a share price target of Au$8.91 (compared to a results day close of Au$7.78), believing there is still strong growth to come.
On product development, Jasper talked about Aconex’s cost management module (Aconex Connected Cost), added as a result of the Worksite acquisition: “The new module was rolled out to selected customers this year in preparation for full commercial availability in FY17. Feedback has been positive, and the inclusion of cost control in our platform has led to new collaboration business.”