- ELMO Software (ELO) is stepping up its presence in the U.K. with the purchase of cloud-based expense management company Webexpenses
- As consideration, ELMO will pay an initial £20 million ($35.3 million) to the vendors, made up of both cash and scrip
- A further £13 million ($23 million) may also be paid upon the satisfaction of certain financial targets
- With the purchase complete, ELMO’s total addressable market has increased by $1.4 billion to $12.8 billion across Australia, New Zealand and the U.K.
- Shares in ELMO Software were up 3.16 per cent at the close of trading yesterday to $5.87 per share
ELMO Software (ELO) is stepping up its presence in the U.K. with the purchase of cloud-based expense management company Webexpenses.
With a large customer base, the acquisition provides ELMO with complementary technology suite, accelerating its mid-market expansion in the region.
According to the terms of the transaction, ELMO paid has paid an initial £20 million ($35.3 million) to the vendors, consisting of 51 per cent cash and 49 per cent scrip.
A further £13 million ($23 million) may also be paid upon the satisfaction of certain financial targets.
As of November 30, 2020, Webexpenses had annualised recurring revenue of £4.5 million ($7.9 million), which has been growing at a rate of 30 per cent each year. With more than 1,000 customers and a 90 per cent retention rate, 96 per cent of the company’s revenue is subscription based.
Webexpenses’ Chairman, Michael Richards, will act as a strategic advisor to the business, while its CEO, Adam Reynolds, will continue in his current role.
With the deal complete, ELMO’s total addressable market has increased by $1.4 billion to $12.8 billion across Australia, New Zealand and the U.K. Webexpenses’ product offering will now be sold to new and existing ELMO customers, while ELMO’s own products will be sold to Webexpenses’ customers.
“Customers will have the ability to manage employee expenses effectively and efficiently as part of our convergent HR and payroll solution,” said Danny Lessem, CEO of ELMO Software.
“The cross-sell opportunity for ELMO’s comprehensive product suite into Webexpenses’ large customer base is substantial. ELMO’s market opportunity has increased markedly, and our strategic positioning is further strengthened,” he added.
Taking into account contributions from Webexpenses, ELMO has upgraded its guidance for the 2021 financial year. Total revenue had previously been forecast at between $61 million and $66 million, but is now thought to fall between $65 million and $71 million.
Shares in ELMO Software were up 3.16 per cent at the close of trading yesterday to $5.87 per share.