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ELMO Software Limited (ASX:ELO) is an IT company based in Australia operating on a recurrent subscription revenues basis. It provides an integrated HR and payroll solution to help the companies to automate manual processes by increasing productivity, efficiency and reducing costs. It offers a Software as a Service (SaaS) platform which streamlines various processes such as performance, remuneration, employee administration, recruitment, onboarding, learning, compliance training, and payroll.
On 24 January 2019, ELO has come up with an announcement regarding a significant acquisition. The company has entered into a binding sale agreement to acquire 100% shares of Get BoxSuite Pty Ltd (BoxSuite) which is expected to be completed in late January 2019. ELO will be paying a total consideration of A$1.4 million in cash of which A$1.0 million is to be paid on completion and the remaining A$0.4 million to be paid on agreed milestones.Â
BoxSuite is also an Australian based SaaS, cloud-based specialist software provider specializing in workplace rostering and time and attendance management which includes an in-built award interpreter for the calculation of appropriate pay rates for both, casual and shift-based employees. It was founded in 2015 by Mr. Jeremy Scott. Mr. Scott has also played a key role in the development of other market-leading cloud solutions such as the Sidekicker, a labour-hire platform. Since its inception, BoxSuite has rostered over 5 million shifts for organizations across Australia and New Zealand.
There are about 5.92 million casual and shift-based employees in the Australia continent representing a total available market of circa A$426 million and approx. 60% of the employees are managed through the use of manual-based processes. It is expected that BoxSuite will accelerate ELOâs entry into this market.
BoxSuite currently generates revenues from SaaS of circa A$100k and is EBITDA neutral. The company further aims to increase the growth in this segment through its deep industry relationships, advanced distribution mechanism, and sales and marketing engine, while targeting the cross-sell opportunities available across the Companyâs customer base of 1,000+ organizations.
The company also plans to generate SaaS revenue of A$37.8 million with the total revenue of A$39.5 million and an EBITDA of A$1.1 million as provided by the company in its FY19 pro forma guidance.
Mr. Danny Lessem, the Chief Executive Officer (CEO) of ELO commented that this acquisition would provide cutting edge native SaaS, cloud-based technology which will disrupt the large and growing rostering and time & attendance market. Through BoxSuiteâs rostering and time & attendance management system ELO will become the only SaaS vendor in the Australian and New Zealand market to offer a single integrated solution with HR, payroll and rostering/time & attendance.
Looking at ELMO Software Limitedâs stock performance and the return it has posted over the last few months, the stock has generated a negative return of 14.17% during the past six months. It is currently trading flat at A$5.270 (as at 12:40 PM AEST on 25 January 2019). The company has ~63.2 million shares outstanding with a market cap of circa A$333.07 million. VKAâs 52-week high and low are marked at A$8.510 and A$4.580 respectively.
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