MOQdigital – the company born out of Breeze and Technology Effect – has snapped up managed services provider Tetran, along with Skoolbag, a provider of software-as-a-service for education and childcare.
The two unrelated deals by Montech, the publicly listed parent of MOQdigital, are worth a total of $12 million, with a $9 million consideration for Tetran and $3 million for Skoolbag.
Tetran brings 90 employees from offices in Australia, New Zealand, Singapore and Sri Lanka, with customers across Australia, New Zealand, Singapore, Japan, London and New York. It turned over $7.5 million in 2015, after growing revenue 20 percent, with earnings of $1.1 million.
The MSP is a partner of many leading vendors, including Microsoft, Cisco, NetApp, Dell and Symantec. A recent project saw Tetran roll out a wireless network for Sydney's Barangaroo Reserve, based on Cisco technology.
Tetran chief executive Don Francis, who will join MOQdigital as a director, said: "This joining together brings significant complementary value to both Tetran and the Montech Group's staff and customers, and through our combined strengths, we will continue to develop a stronger technology company with global reach."
Montech is paying $4 million in cash and 142 million shares for Tetran.
Skoolbag's software-as-a-service solution is used by educational institutions, child care centres and sports clubs, allowing communication with parents or club members through a personalised smartphone or web application.
The SaaS solution has been implemented in more than 2,500 institutions across Australia and overseas, and has more than 1 million end users. It claims around 20 percent penetration across both private and public schools in Australia.
Nicki Page, chief executive of MOQdigital, said: “The Skoolbag acquisition enhances our SaaS capabilities with clear subscription revenue streams as well as the potential to build an education service that has a network effect – meaning that the more people who use it, the more want to because of the value it adds to parents, schools, teachers and students. It is an ideal distribution platform.”
Montech paid $3 million in cash for Skoolbag, which grew by 30 percent in its 2015 financial year to hit $1.7 million revenue, with earnings of $600,000.
The two acquisition targets exemplify the mix of services already offered by MOQdigital. The company was created in 2014 when channel veteran David Shein rolled up award-winning Microsoft application partner Breeze with Brisbane-headquartered systems integrator Technology Effect. Shein was the founder of ComTech, which he grew to revenues of $700 million and 1,400 staff before selling it to Dimension Data in 2001.
In the first half of the 2016 financial year, MOQdigital turned over $16.8 million, split 59 percent technology sales, 29 percent professional services and 11 percent recurring revenue.
According to today's announcement, the acquisitions of Tetran and Skoolbag "will make a significant contribution to Montech’s fast growing recurring revenue base".
Speaking to CRN last year for one of our sessions at the 2015 Microsoft Australian Partner Conference, Shein expressed the importance of recurring revenue in his investment strategy. "We are looking for monthly recurring revenue and cloud-based businesses, or companies that want to convert to cloud-based business.