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NOVATTIGROUPLIMITED(ASX:NOV) 02APRIL2020
I N N O V A T I O N F O R P A Y M E N T S
EmersionSoftwareSystems Acquisition
SUBSCRIBER BILLING PAYMENTS FINTECH BANKING SERVICES
ThisdocumenthasbeenpreparedbythemanagementofNovattiGroupLimited(Company).Theinformationisbasedonpubliclyavailableinformation,internallydevelopeddataandothersources.Whereanyopinionisexpressedinthisdocument,itisbasedontheassumptionsandlimitationsmentionedhereinandisanexpressionofpresentopiniononly.Theinformationinthisdocumentisanoverviewanddoesnotcontainallinformationnecessaryforinvestmentdecisions.Inmakinginvestmentdecisionsinconnectionwithanyacquisitionordisposalofsecurities,investorsshouldrelyontheirownexaminationandconsulttheirlegal,businessand/orfinancialadvisers.TheCompanydoesnothaveasignificantoperatinghistoryonwhichtobaseanevaluationofitsbusinessandprospects.Therefore,theinformationcontainedinthisdocumentisinherentlyspeculative.NowarrantiesorrepresentationscanbemadebytheCompany,itsdirectorsoremployeesastotheorigin,validity,accuracy,completeness,currencyorreliabilityoftheinformation.TheCompany,itsdirectorsandemployeesdisclaimandexcludeallliability(totheextentpermittedbylaw)forlosses,claims,damages,demands,costsandexpensesofwhatevernaturearisinginanywayoutoforinconnectionwiththeinformation,itsaccuracy,completenessorbyreasonofreliancebyanypersononanyofit.ThisdocumentmaycontainstatementsrelatedtoourfuturebusinessandfinancialperformanceandfutureeventsordevelopmentsinvolvingtheCompanythatmayconstituteforward-lookingstatements.Thesestatementsmaybeidentifiedbywordssuchas"expects,""looksforwardto,""anticipates,““targeting,”"intends,""plans,""believes,""seeks,""estimates,""will,""project"orwordsofsimilarmeaning.TheCompanymayalsomakeforward-lookingstatementsinotherreports,inpresentations,inmaterialdeliveredtoshareholdersandinpressreleases.Inaddition,Companyrepresentativesmayfromtimetotimemakeoralforward-lookingstatements.SuchstatementsarebasedonthecurrentexpectationsandcertainassumptionsoftheCompany’smanagement,andare,therefore,subjecttocertainrisksanduncertainties.Avarietyoffactors,manyofwhicharebeyondtheCompany’scontrol,affecttheCompany’soperations,performance,businessstrategyandresultsandcouldcausetheactualresults,performanceorachievementsoftheCompanytobemateriallydifferentfromanyfutureresults,performanceorachievementsthatmaybeexpressedorimpliedbysuchforward-lookingstatementsoranticipatedonthebasisofhistoricaltrends.TheCompanymakesnoundertakingtoupdateorrevisesuchstatements.Duetorounding,numberspresentedthroughoutthisandotherdocumentsmaynotadduppreciselytothetotalsprovidedandpercentagesmaynotpreciselyreflecttheabsolutefigures.
Disclaimer–ImportantNotice
SUBSCRIBER BILLING PAYMENTS FINTECH BANKING SERVICES
EmersionisaleadingproviderofCustomerEngagement,Payment,ProvisioningandSubscriptionBillingsolutions.
Emersionempowersteamstoworkremotelyandsecurely,helpingthemEngagetheircustomers,IntegratetheirsystemsandAutomatetheirbillingandpaymentprocesses.
EBITDApositiveandgrowing
• EBITDApositive• PotentialtogrowtransactionrevenuewithminimalinvestedfundsinfusionfromNovatti
• Generatespredictable,cumulativeandstablesubscriptionrevenues
• Attractivelypricedatapprox.2xAnnualRecurringRevenue(ARR)
Synergisticoperations
• BuildsonNovatti’sTransactionsDivisionoffering• EstablishedcustomersinAustralia,NewZealandandSingapore
• Significantgrowthpotentialinexistingmarkets(APAC)andoverseas.
• Acquisitionbringsadditionalintegration,paymentsandsubscriptionmanagementskillsandexpertisetoNovatti
• FollowsNovatti’s2017acquisitionofbasis2billingsoftwarebusiness
ACQUISITIONRATIONALE
SUBSCRIBER BILLING PAYMENTS FINTECH BANKING SERVICES
Seller EmersionSoftwareSystemsPtyLtd
Natureofoperations • RealTime–Subscriptionbilling,provisioning,paymentsandbusinesssupportsoftwareplatform• Partnershipswithleadinginternationalsoftwarevendors-Salesforce,XeroandConnectWise• Developingintegrationstoleadingmarketplaces–RhipeandIngramMicro• CustomersincludeDatacom,SimplyEnergy(NZ),FrontierNetworks,DataExpress,Whiz(SG),
Natureofrevenues • >80%recurringrevenue(resilienttoCOVID-19scenarios)• Diversifiedcustomerbasewithmorethan70customers• Highly“sticky”duetoefficienciescreated(e.g.automatingtheentirepaymentprocess)• Lowcustomerattrition
Growthprofile • Existingclients–potentialforincreasedrevenuefrommoreactiveaccountmanagement• Leveragingkeyglobaldistributionpartners–ConnectWise&Salesforce• ExpandinginAsiaPacificRegion(AU,NZ,SG)• NewpotentialinternationalmarketsincludingEuropeandUS,UKandCanada• Growthtodatehasbeendrivenbywordofmouth
OPPORTUNITYOVERVIEW
SUBSCRIBER BILLING PAYMENTS FINTECH BANKING SERVICES
Emersionprovidessubscriptionbilling,paymentsandprovisioningcapabilitytoManagedservicesproviders(MSP's),Independentsoftwarevendors(ISV's),Systemintegrators(SI's),UtilitiesandTelco's,withintegrationtoCRM,professional
servicesautomationandconfigure,price,quote(CPQ)tools.
Emersion’sgo-to-marketstrategy
• StrongvendorrelationshipsinAsiaPacificRegion.• Inboundmarketingtodriveleadgeneration
• PartnershipwithConnectWisewhichisusedbymorethan970MSPsintheANZregion(Source:ConnectWise)
• ExploringpartnershipswithValueAddedDistributorsIngramMicro(‘Theworld’slargestdistributorofcomputerandtechnologyproducts’)andRhipe(‘TheCloudCompany’)
• PromoteintegrationstoXEROandSalesforce
Marketsegmentthematic
• Fundamentalconnectionwiththegrowthofthedigitaleconomy
• Thismarketsegmentisexperiencingdigitaldisruption,movingawayfromcapitalexpendituremodeltowardssubscriptionandconsumptionmodels
• Productandservicesalesprovidedonsubscriptionneedflexibleprovisioning,billingandpaymentssupport
MARKETSEGMENTDEFINITION
SUBSCRIBER BILLING PAYMENTS FINTECH BANKING SERVICES
INTEGRATION AUTOMATE ENGAGE
EMERSIONOVERVIEWEmersionintegratesdiversebusinesssystems(e.g.Accounting,PaymentGateways,Suppliers,VendorsandInternalSystems).
Thismeansthatmanualandtimeconsumingprocesseslikesubscriptionbilling,invoicing,paymentprocessing,collectionsandreporting
canbeautomated.Thisincreasestheamountofresourcesavailableinabusinesstofocusoncustomerengagement,andresultsina
bettercustomerexperience,aswellasincreasedbusinessprofitability.
Emersion’sadvancedpaymentsystemmeansthatcustomerscanpaytheiraccountsbymultiplemethodsincludingcreditcard,EFT,bank
transfer,directdebitandBpay.Invoicescanbesettogooutautomaticallyatafrequencychosenbythecustomerorsentonanad-hoc
basis.Emersioncanbeconfiguredtosuitanyproductorservice,includingbundledsubscriptionandusagebasedservicesandproducts.
COLLECT
VALUECREATION
SUBSCRIBER BILLING PAYMENTS FINTECH BANKING SERVICES
ENGAGEMENTTOSUPPORTAPOSTCOVID-19WORLD Detailed invoices make it clear exactly what products and services a customer is paying for.
DETAILED INVOICES
Self service portals make it easy for customers to view and pay their bills, and make changes to
their account details and their subscription.
SELF-SERVICE PORTALS
Invoices and self service portals can be customised to match the look and feel of a company’s
brand, providing a more consistent service offering.
BRANDING
The time to process orders while a customer is in store or on the phone is greatly reduced
through Emersion.
QUICKER ORDER PROCESSING
Less data entry and automated internal processes mean fewer errors. This results in a better
customer experience and less work staff.
FEWER ERRORS
Staff have to do less manual work, and receive fewer enquiries from customers, meaning that it is
easier to service a growing customer base.
BETTER RESOURCE MANAGEMENT
Ability to log tickets for support and changes to their service.
TICKETING
^ ^
^ In Progress Integration
SUBSCRIBER BILLING PAYMENTS FINTECH BANKING SERVICES
Full margin analysis against all billing objects in the system. Auditing is real time and automated.
AUDIT & MARGIN ANALYSIS
8
Emersion’s diverse integrations, sophisticated workflows and automations mean that customers
are billed for all products and services on their account.
REVENUE ASSURANCE
Emersion supports Payment Gateways in multiple countries and currencies. The system can
store and tokenise cards allowing the service provider to change payment vendors easily.
PAYMENT GATEWAY AGGREGATION
Events and notifications can be sent out if a customers account is overdue. These can be sent to
customers or internal staff.
Emersion supports online payment methods including one off payment methods (Credit Card,
EFT and Bpay) and subscription payment methods (Credit Card, Direct Debit)
ONLINE PAYMENT
Emersion’s billing is in real time. Clients have control over when they bill their customers (up to
28 times per month) and can also send ad-hoc invoices when needed.
REAL TIME BILLING
Emersion supports complex products and services, including usage based products. Multiple
products and multiple services can be combined together into bundles.
COMPLEX USAGE & RATING PACKAGES AND BUNDLES
PAYMENTGATEWAYS
SupportedpaymentgatewaysintheAPACregioninclude:GLOBAL• Stripe• Wirecard
AUSTRALIA• ANZBankeGate• CommbankbPoint• E-matters• IntegraPay• Ezidebit• SecurePay• StGeorgeBank• WestpacPaywayInstantCreditCard• ABAFileProcessing
NEWZEALAND• Westpac• ASBBank• BankofNZ
SINGAPORE• DBSGiro
EVENTS AND NOTIFICATIONS
BILLING&PAYMENTS
SUBSCRIBER BILLING PAYMENTS FINTECH BANKING SERVICES
Solutionsuitableforallproducts,allmarkets,multi-tier
• Uniqueindustryandproductagnostic• Subscriptionbilling,servicemanagement,provisioning• Singleportal,deliveredbyAWSCloudservice• Keypartofclient’snewdigitaleconomyofferings
Growthdrivers
• Alignswiththeglobaldigitaltransformationtrends• Demandenhancedviakeyglobalreferralpartner• PaymenttechnologiesprovidevalueaddedopportunitiesinNovattimarkets• Gartnerconsultingoninternationalandproductstrategy
Targetmarketsizing
• Approximately11,100MSPsinANZregion• RhipeintegrationissuitableformostMSPsinAPACregion• PartnerConnectWisehave24,000+globalcustomers–770+inANZ• CanleverageNovattiinternationalmarketpresence• Smallmarketshareinstronglygrowingmarket
Highlydesirableserviceoffering
• Essentialbusinessrequirementforhighgrowthmanagedservicebusinesses• Createsefficiencies,productivity,andenablesclientstofocusontheirtargetedmarketsegmentwithsalesefforts,notbackroomadministration
• Solvesindustrypainpointsincludingintegratingsubscriptionbillingintotheiroperations,acceptingonlinepaymentsandcustominvoices
GROWTHMODEL
SUBSCRIBER BILLING PAYMENTS FINTECH BANKING SERVICES
Sales&Distribution• BolstersboththeNovattiandEmersionplatformsalescapacity• ExpandsNovattisubscriptionbillingandpaymentssalesoperationsandreach• Leveragescurrenteffortsofmanagementtobuildbillingrevenues• Costefficientoverheadswithbothlocatedincloseproximityandtargetingbillingandpaymentsopportunities
TechnicalTeam• Smallspecialistteam• SimilaroperationalsupportmodeltoNovatti• Novattiunderstandsthetechnologyandcansupport
Culture&Management• FitsNovatticulture• FitsNovatticustomermanagementmethodology• Buildsmanagementexpertise• BuildsoverallNovatticapability
HIGHLYSYNERGISTICACQUISITION
SUBSCRIBER BILLING PAYMENTS FINTECH BANKING SERVICES
EmersionPaymentSystem• SpecificsynergiesforNovattifromEmersionpaymentcapability• Interfaceswithvariousbanks,cardprovidersandotherpaymentservicesprovidingaPaymentGatewayfacility• Allowsforstorageofpaymentinformationandcollectionofpayments• Manual/userinitiatedandautomatedpaymentmethods
Paymentplancapability• Supportsvariouspaymentplans• CreditcardsandBankAccountsdebitedwithoutmanualentryofeachtransaction(realtimeorbatch)
Automatedpaymentmethods• Directdebitfromabankaccount.• Creditcards(VISA,MasterCard,Diners,AMEX)• BPayBillercodeandReferencenumbergeneration/storageperaccount
PAYMENTSCAPABILITY
SUBSCRIBER BILLING PAYMENTS FINTECH BANKING SERVICES
Revenue $1.71m
$1.43mrecurringrevenue(>80%)
EBITDA $0.3m
Cashflow Cashflowpositive
Headofficelocationandterritory
BourkeStMelbourne
ClientsinAustralia,NewZealandandSingapore
Noofstaff 13
FINANCIALSFY19ACTUAL
SUBSCRIBER BILLING PAYMENTS FINTECH BANKING SERVICES
Multiple:2xARR
Transactiontype:Assetpurchase
Enterprisevalue:$2.6m
Consideration• Shares– 16,725,000shares
• Cash– $1,000,000inmonthlypaymentsuntilJune2021
Transition&Integration• Boltonacquisition• Culturalalignmentfacilitateseffectivetransition
• Managementoverhead–low,strongcontributorstodailyoperations
SavingsandGrowth• Strongtechnologyandstaffingsynergies• Stronghighgrowththematics–automation,digitaltransactions,subscriptionsservices
• Accumulativerecurringrevenuesgrowth
TRANSACTIONOVERVIEW
ARR–AnnualisedRecurringRevenue
SUBSCRIBER BILLING PAYMENTS FINTECH BANKING SERVICES
GrowthopportunitiesConsiderablegrowthpotentialinAustralasianmarketandpotentialtoexpand
internationally,particularlytoleverageNovattiinternationalpresence
RevenueCirca$2mwithsignificantpotentialforfurthergrowth
NovattiRevenueEnhancesongoingrevenue
growth
CashflowPositivecashflow.
APACpresenceLocalMelbournebasedbusinesswithAPACclient
profile
Recurringrevenue>80%ofrevenueisrecurring
SynergySavingsLowandtobereinvested
forgrowth
COMPELLINGVALUEACQUISITON
SUBSCRIBER BILLING PAYMENTS FINTECH BANKING SERVICES
CONTACT
PeterCookChiefExecutiveOfficer&[email protected]|+61411111153PeterPawlowitschChairmanpeter.pawlowitsch@novatti.com|+61419299302
www.novattigroup.com