Feb 20 2018

Aconex delivers ‘solid’ first half growth

Aconex logo 2014Melbourne, Australia-based SaaS construction collaboration technology provider Aconex has had what it describes as a ‘solid’ half-year performance. The company has announced its results for the six months to 31 December 2017, showing revenues growing 13% to A$86.9m – c. £49.1m or US$68.6m or €55.6m – compared to A$77m for the corresponding period in 2016.

Aconex CEO Leigh Jasper said the result reflected a strong international performance:

Leigh Jasper“During the half year there was again a strong revenue performance in our international markets, especially the high-growth Americas and Asia regions. This highlights the success of our targeted strategic initiatives and ability to leverage the Aconex brand and global scale to expand our user network, increase customer value and further extend our leadership position.”

New business wins and the ongoing conversion of project customers to enterprise agreements drove a 10% uplift in Australia and New Zealand revenues. Revenues generated outside of the ANZ region increased 16%, and now constitute 68% of total revenue.  Revenue growth was highest in the Americas region which delivered a 31% uplift on the prior corresponding period, while revenue in Asia increased 22%.

EBITDA from core operations, excluding acquisition and integration costs, increased 23% to $9.1 million, compared with $7.4 million in the prior corresponding period.

The company said transition of customers to enterprise agreements had increased revenue from such arrangements from 44% to 47% of total revenues; in the ANZ region, 69% of revenue derives from enterprise agreements.

Aconex also said customer feedback has been positive towards the proposed Oracle acquisition. The scheme is subject to a shareholders meeting in Melbourne on 14 March 2018.

My view

The 13% revenue growth is a marked slowdown from the 38% growth reported in February 2017 (post), which followed an earlier trading update in which Jasper had been downbeat about growth prospects, revised down earlier operating profit forecasts from between 62% and 84% growth to between 10% and 32% growth. While these latest figures are disappointing, the impact will be negligible given that most shareholders are likely to be cashing in their shares soon.

With the Aconex board strongly recommending shareholders accept the Oracle offer, these results are likely to be the last financial reports issued by the firm. Assuming the deal is nodded through, Aconex will become the dominant product set in Oracle’s Construction and Engineering Global Business Unit (alongside the Primavera and Textura offerings), giving it combined revenues of around A$320m (c. £180m or US$252m or €204m) – figures only rivalled by the leading construction software houses such as Autodesk and Trimble (though both have interests outside AEC, substantial non-SaaS portfolios, and in Trimble’s case, substantial technology hardware products), with most of the pure-SaaS AEC rivals some distance behind.

The ongoing push to close enterprise deals may also reflect some competitive pressures. In Aconex’s domestic ANZ region, for example, US SaaS provider Procore set up an Australasian operation in early 2017, and claims 150% client growth over a ten-month period while bolstering the local team to over forty employees (see news story). Procore has just appointed former Salesforce executive Tom Karemacher to oversee its sales, marketing and operational strategies across the Asia Pacific region, and lead the team operating out of the Sydney office. In the US, Oracle/Aconex may also face stronger competition from Trimble following its recent US$500m acquisition of e-Builder, and that competition may extend more widely if Trimble successfully rolls out Trimble Connect internationally.

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