Case Study - Vonex Ltd (ASX:VN8)

July 14, 2021

Vonex Ltd (ASX:VN8) is a retail and wholesale provider of telco solutions across voice, data and mobile platforms. Vonex recently raised $14.0m in a Placement that assisted in its acquisition of MNF Direct for $31.0m. Vonex has experienced strong growth to date, as the company attracts more registered users (+37,500 registered users to-date) to its Cloud-based phone system On-desk which is a voice-as-a-service (VaaS) solution, with limited customer churn.

Key Investment Highlights of Vonex Ltd:

  • Vonex is a leader in the delivery of retail and wholesale solutions, holding a substantial SME customer base across Voice, Mobile and Internet Services,     generating +90% Annual Recurring Revenue (‘ARR’) in FY21.
  • The acquisition is transformational for Vonex delivering considerable customer scale with:
    - +5,267 SME customers
    - +180 new channel partners  
  • Vonex has capabilities across a significant majority of the business products and services provided by the Direct Business, with both businesses charging on a per-user basis, resulting in very high levels of customer retention and strong ARR growth
  • Revenue synergies to be generated from cross-selling incremental products to Direct Business customers, with a particular focus on bundling both Mobile and Internet services to existing Direct Business customers and driving ARPU of this customer base
  • Cost synergies of approximately $1.0m to be delivered predominantly from immediately available lower rates on wholesale pricing
  • Vonex management hold a strong track record of acquiring and integrating complimentary businesses, as shown via the successful acquisition of both 2SG Wholesale and Nextel businesses
  • The transaction will deliver scale and an improved ability for the business to continue to growth both organically and inorganically and continue to rerate to trade in line with significantly larger peer trading multiples

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