Telco innovator, Vonex, is expecting its annualised recurring revenues to jump by 50% from next month when it completes the takeover of telecommunications and data wholesaler, 2SG Wholesale. The ASX-listed cloud-based telco said that it has completed due diligence on 2SG and its acquisition contract is now binding, with the deal expected to be consummated by months end.
Vonex said that it expects its annualised recurring revenue, the metric that generally underpins technology companies, to hike by 50% to $14m from around $9m by the end of September 2019.
2SG Wholesale previously reported revenues for the 2019 financial year of $7m, according to Vonex.
Vonex announced the acquisition of 2SG back in November 2019 and has since been undertaking due diligence on the ‘going concern’ aspects of the 2SG business.
The successful conclusion of that process was a key condition precedent to the deal which is now binding.
2SG is a Brisbane-based telco that delivers hardware and connectivity solutions to various Australian Managed Service Providers, ISP’s and System integrators.
Vonex said it expects 2SG to deliver a positive EBITDA in the range of $750K in FY21 and a return on investment within three years.
Co-founder of 2SG, Jason Gomersall, will be appointed to the board of Vonex as a non-executive director. Mr Gomersall has long been at the forefront of the telco market, starting out as a foundation franchisee of the Optus World retail chain. He is also the founder, CEO and Managing Director of i-Seek Communications.
Vonex Managing Director, Matthew Fahey said: “We are excited to welcome Jason Gomersall, who is highly regarded in the telecommunications industry and adds important industry specific skills and experience to our Board as a non-executive Director”.
Annualised recurring revenues are gold for telco’s and represent the go-to number for market watchers when looking at tech companies in particular.
Any exponential jump in annualised recurring revenues, even if acquired via a takeover, has the effect of fortifying a company’s accounts and the acquisition of 2SG for Vonex can not be overstated at this stage of the telco upstart’s development. With payback in just three years, it doesn’t look like Vonex has given up the farm to do it either.
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By Matt Birney
