Melbourne, Australia-based SaaS construction collaboration vendor, Aconex, provided a trading update covering the quarter ending 30 September 2016 on Monday (25 October announcement). Gross cash receipts totalling Au$41.8 million (US$31.65m, £26.1m or €29.01m), showing an increase of 44% from the first quarter last year (clearly boosted by now including Conject revenues). Net operating cash flow from core operations was Au$2.0 million, excluding acquisition and integration costs of Au$1.6 million related to the Conject acquisition.
Aconex is forecasting 2017 year-end revenues in the range of Au$172 to Au$180 million and EBITDA in the range of Au$22 to Au$25 million, excluding acquisition costs. Anticipated full-year 39% growth is up on the 31% core organic growth Aconex saw in 2016 – also emulated by competitors such as Viewpoint and Think Project! (post). Longer-term, the company is looking at 20-25% growth in 2018 and 2019.
Aconex’s outlook took into account, among other things:
- lower than expected growth of the European business (“Brexit” uncertainty and accelerated transition to selling Aconex in the UK)
- the impact of GBP and Euro currency movements on revenue … and
- oil price uncertainty – delays in decision making in the Middle East.
Regarding the “lower than expected growth” in Europe, CEO Leigh Jasper told this week’s Aconex AGM about the integration of Conject and the “transition from selling Conject to selling Aconex product”:
The integration has been progressing very well at a customer and people level. We have retained all customers and key staff and have very good cultural alignment between the two businesses. We are also making solid progress on operational integration, moving toward one single operating platform and set of standards for the company globally.
As part of the integration process we are conducting a review of the European operations, including Conject’s facilities management business, which provides on premise software rather than software-as-aservice model.
Growth in the short term has been lower than expected. We are working to complete the transition to selling Aconex, particularly in the UK, to reset the upward growth trend.
Speaking to industry contacts at Digital Construction Week events in London this week, I heard rumours of some Conject users being “resistant” or “hesitant” about shifting from their preferred system to the Aconex platform; in Australia, brokers also suggested Conject’s acquisition by Aconex had impacted Conject’s pipeline of new business opportunities. Clearly, any customer’s Conject-to-Aconex migration plans will vary according to whether projects are just starting or nearing completion and whether customers are on enterprise deals, and rivals will be quick to pounce if customers decide to review their options – but Jasper seemed confident about customer retention.
The review of Conject’s FM business is not unexpected. At the time of the acquisition, I said: “I would not be surprised if Aconex disposed of some of the non-SaaS elements of Conject’s German operation, while looking to expand its own whole-life asset and data management capabilities in the cloud.”
Conject slips behind Think Project!
Incidentally, I did some more number-crunching to look at revenue trends experienced by the leading players and to include Conject group figures in my analysis. It is clear that in the past couple of years the Conject business as a whole was not growing revenues as quickly as its peers. The gap between the Munich-based business and its main rival across the city narrowed, with Think Project! finally moving ahead in 2015 (something it started talking about doing in May 2013):