IMImobile, a London based global technology company which provides software and services to help businesses capitalise on the growth in mobile communication, today announces its intention to launch an initial public offering (“the Offer”) and seek admission of its ordinary shares to trading on AIM. The Offer will seek to raise gross proceeds of up to £30m via a placing of new ordinary shares (“the Placing”). SPARK Advisory Partners Limited is acting as Nominated Adviser, WH Ireland Limited and Whitman Howard Limited are Joint Brokers to the Company.
- IMImobile’s solutions, based on its own intellectual property, enable clients to engage and transact with their customers more efficiently through smarter mobile engagement using mobile as a channel to create new revenue streams, as a CRM and customer engagement channel and to improve business efficiency.
- Clients include a large number of mobile operators and blue-chip enterprises worldwide, typically on multi-year contracts providing a a high level of earnings visibility, with significant recurring or repeat revenues. The company services clients in over 60 countries and has 650 employees worldwide.
- Strong financial track record and profitable growth
- For the year ended 31 March 2013, sales were £38.5m with an underlying EBITDA of £6.1m(underlying EBITDA excludes share based compensation, impairment charges, acquisition costs, disposal charges and restructuring expenses)
- Fast growing changing market driving global trends which are supporting the increased importance of mobile data networks and smart devices
- Operators globally are forecast to spend $24 billion by 2016 on software and services to revamp and modernise their service delivery capability in order to address the enterprise cloud opportunity
- 3G penetration in Indian and Sub-Saharan Africa expected to quadruple in the period 2013 to 2017 to over 650m subscribers.
- Highly experienced management team
- Management team benefits from in-depth experience in technology, media, engineering and banking sectors with original founder remaining as Chairman and being joined by experienced telecom and IT senior non-executives, John Allwood and Simon Blagden.
- Geographic and market consolidation opportunities
- Directors have significant experience in acquiring and developing companies. The Group has to date completed and integrated a number of acquisitions and the Company believes that acquisitions can be made at attractive valuations.
- Admission is expected to bring a number of benefits including raising the Group’s profile; better positioning the Group to attract, retain and recruit key staff and providing more flexibility for future growth.
- Net proceeds of the Placing will be utilised to:
- Drive further revenue and profit growth from the core business;
- Exploit further revenue opportunities in key verticals;
- Maximise opportunities in selected geographic markets; and
- Take advantages of opportunities to consolidate a fragmented market
Jay Patel, Chief Executive Officer, commented,
“We have been helping our clients take advantage of the structural trends surrounding mobile communications, social networking and cloud computing for a number of years. In that time, we have built a robust technology platform and strong client relationships. As a result, we are well placed to deliver sustained long term revenue and profit growth.
We are excited about the benefits of being an AIM quoted company and believe that the Company’s Admission to AIM and the Placing will further support our growth ambitions.”
Jay Patel, Chief Executive Officer
Michael Jefferies, Group Finance Director
c/o Buchanan +44 (0)20 7466 5000
Buchanan – Financial PR adviser
Mark Edwards / Sophie McNulty / Gabriella Clinkard
Tel: +44 (0)20 7466 5000
SPARK Advisory – Nominated adviser
Matt Davis / Sean Wyndham-Quin
Tel: +44 (0)203 368 3552
Whitman Howard – Joint Broker
Tel: +44 (0)207 087 4556
WH Ireland – Joint Broker
Tel: +44 (0)207 220 1666
Full details of the Placing will be included in the Admission document, expected to be published in due course.
The Company’s solutions enable its clients to capitalise on the ubiquity of mobile networks and mobile devices by seeking to help them to use mobile as a channel to create new revenue streams, as a CRM and customer engagement channel and mobile to improve business efficiency. The Company generates its revenues through a variety of flexible delivery models: Managed Solutions; SaaS/Cloud Based Services; and Licence and Professional Service Fees. In the Directors’ opinion, the ability to offer a broad range of mobile solutions through differing delivery models for clients in different geographical markets is a competitive differentiator for the Company. Revenue models are OPEX-based (with the exception of licence sales) with either revenue sharing arrangements or transaction/volume based pricing with additional professional services engagement. The Directors believe this provides a significant level of stickiness to client relationships and presents strong barriers to entry for competitors.
IMImobile currently works with a large number of mobile operators and blue-chip enterprises, and its solutions are being delivered in over 60 countries in Europe, the Americas, MEA and India. Key mobile operator customers include Vodafone, O2, Telefonica, Aircel, Airtel, BSNL, AT&T, Mobitel, MTN and France Telecom and key media and enterprise customers include, Centrica, Universal Music, Tata, the AA, the BBC and other major broadcasters and financial institutions.
The Company is headquartered in London with a development centre in Hyderabad, India, and has more than 650 employees worldwide. The Company operates two 24/7 network operations centres, one in High Wycombe and the other in Hyderabad, to centrally monitor, maintain, manage and upgrade the Company’s software deployed across 7 data centres and customer premises. Infrastructure deployed and managed by the Company includes over 1,200 high end servers and other network elements such as firewalls, load balancers and switches. The India-based development and operations structure provides substantial cost advantages enabling the Company to continually invest in platform and product development.
IMImobile operates across numerous sectors and geographical markets. The proliferation of mobile data networks and smart devices are driving a number of global trends which the Directors believe positively impact IMImobile’s operating environment which are set out below:
Importance of mobile data and new revenue streams to mobile operators
- A growing proportion of total mobile operator revenues are from mobile data services which, with the rollout of 4G networks, is expected to increase significantly. IMImobile helps operators create and launch consumer services and helps mobile operators monetise and capture additional value from their network assets.
Increasing focus on customer retention, loyalty and ARPU enhancement
- As mobile subscriber penetration matures, mobile operators are increasingly focusing on retaining existing customers, driving loyalty and increasing customer spend. IMImobile’s suite of customer lifecycle management solutions, with deep analytics capabilities, helps operators with these objectives.
The shift to Social CRM
- The Directors believe that social media environments which were originally used primarily for networking and entertainment are rapidly evolving into platforms for businesses to transact with, service and engage their customers. The Company’s Social Self-Care solution shifts routine, low-value yet expensive customer service interactions to a self-serve model on popular social media services such as Twitter and Facebook. This solution not only helps mobile operators measurably reduce customer service costs but also enriches CRM data by tapping into the social identities of customers.
Smartphone penetration driving value chain disruption and business efficiencies
- The introduction of smartphones, such as the iPhone, has led to changes in consumer behaviour and driven disruption in the value chain across many industries. In the Directors’ opinion this trend creates substantial opportunities for IMImobile particularly in emerging markets where the mobile device is the main access point to the internet.
Enterprise IT expenditure moving to Cloud Based Services and use of APIs
- Overall IT spending continues to increase and is predicted to reach $3.8 trillion in 2014, the largest component of which is software and applications. The rapid expansion of cloud and internet services has also stimulated an explosion in the use of APIs. The Directors believe IMImobile is well positioned to leverage its cloud-delivery SaaS model with enterprises globally and that its platforms and solutions are able to leverage the API usage trend in the enterprise market.
Products and solutions
IMImobile has created a mobile service delivery platform known as the DaVinci ESP and an accompanying suite of software products. The Directors believe that the DaVinci platform and its products portfolio, coupled with professional services for initial service enablement, on-going operations (or both) form the source of differentiation and competitive advantage which include:
- Unlike systems integrators, who rely heavily on different independent software vendors, IMImobile is able to offer quick turnaround for on-going enhancements and deliver high service levels for system availability and performance.
- IMImobile’s solutions and revenue streams differ from a standard licencing model because they are based on measurable business outcomes and de-risking of the launch of new services by lowering upfront investments in the creation of those services.
These solutions are designed to enable clients to drive incremental revenue, enhance customer engagement and improve business productivity.
IMImobile is able to deliver its core products using multiple delivery models based on the requirements of its clients. The products can be delivered either as managed solutions, licensed for on-premise deployment or accessed directly via cloud infrastructure. Professional services are billed on a time cost basis.
A combination of software and professional services where the client contracts the day to day management responsibilities of the service as well as the technical delivery and platform to IMImobile. Managed Solution contracts tend to be long-term.
A provision of software or API connectivity which is used directly by the client; this is supported and hosted using IMImobile’s infrastructure. The commercial model tends to be a mix of recurring license and support fees plus transactional revenues. The on-going operational support requirements tend to be lower, with variable third-party costs incurred, for example, in wholesale SMS messaging or email costs. For blue-chip clients the services often require deep integration into their own work-flows and processes and consequentially are long term relationships.
Software provided under a licence fee model is deployed in the client’s own network environment and sometimes sold in conjunction with third-party hardware.
The Directors believe that the Company’s revenue model provides significant visibility of forward earnings. The Board estimates that at the time of Admission approximately 85 per cent. of forecast revenues for the next twelve months are either recurring or repeat in nature or arise from existing contractual client relationships.
Reasons for Admission and use of proceeds
The Directors believe that Admission will bring a number of benefits including:
- Helping to raise the profile of the Company;
- Better positioning the Group to attract, retain and recruit key staff (who may be further incentivised through the Share Option Scheme); and
- Providing more flexibility for future growth.
The Offer will seek to raise gross proceeds of up to £30m via a placing of new ordinary shares.
Net proceeds of the Placing will be utilised by the Group to:
- drive further revenue and profit growth from existing customers;
- exploit further revenue opportunities in key verticals;
- maximise opportunities in selected geographic markets; and
- take advantages of opportunities to consolidate a fragmented market.
Strategy for growth
The Directors believe that IMImobile’s DaVinci platform and products are well positioned to take advantage of the structural trends surrounding mobile communications, social networking and cloud computing.
IMImobile’s strategy for sustained long term organic revenue growth and profitability is set out below:
Continue to execute on the core opportunity with mobile operators
- The Directors believe there are substantial cross-sell opportunities leveraging IMImobile’s broad portfolio of solutions to expand the footprint of its engagement with existing clients.
- Opportunities to expand existing relationships with large group operators from individual countries to a group level across several countries present important growth prospects. Additionally, with increasing penetration of smartphones, particularly in emerging markets, mobile operators are thinking about how to drive data consumption and data revenue. IMImobile, with its experience in mature markets blending the best of the OTT world with operator’s own services, is well placed to offer compelling solutions to drive data revenue.
- As subscriber additions flatten out, mobile operators are increasingly focusing on retaining existing customers, driving loyalty and increasing customer spend. IMImobile’s suite of customer lifecycle management solutions with deep analytics helps operators with these objectives.
- The existing managed services contracts with recurring revenue streams provide good forecasting visibility and as these services continue to grow, IMImobile’s revenues are also expected to grow.
Build on existing traction in key verticals
- IMImobile’s solutions, beyond the operator segment are applicable to enterprises that have large diverse customer bases and regular customer contact. As a result these enterprises have complex multichannel engagement requirements which are common with the requirements of mobile operators.Further expansion into select geographies
- The Directors will look for opportunities to expand into geographies where structural changes to the market will mean that IMImobile’s products portfolio, skills and expertise will provide it with a competitive advantage.
- The market for the provision of mobile software and services is highly fragmented, characterised by a significant number of small companies and few larger businesses such as IMImobile.
- As a result, there are a significant number of bolt on acquisition targets that could be acquired at attractive valuations, whose clients and operations could be synergistically integrated with IMImobile, leveraging the Company’s broad based software platform. The Directors also believe that in certain geographies it may make strategic sense to look at larger acquisition targets to take advantage of the mobile operators’ increasing desire to deal with a smaller number of larger vendors.
- The Directors have significant experience in acquiring and developing companies either within IMImobile or, as in the case of the Chief Executive Officer, as a venture capital investor. IMImobile has to date completed and integrated four acquisitions including the successful public takeover of AIM listed Win PLC in August 2010.
- IMImobile as a cash generative business is often contacted by vendors of smaller market participants as a potential buyer.. The Directors believe that the proceeds of the Placing will allow the Company to accelerate its growth through selective acquisitions.
Current trading and prospects
Since 30 September 2013, the Company has traded in line with Directors’ expectations. The trends seen in the first half of 2013 have continued, with revenue growing at a consistent rate and stable margins.
Board of Directors
It is anticipated that on Admission the Board will comprise of:
Viswanatha Reddy Alluri (“Vish”) (Founder & Executive Chairman), age 60
Vish founded IMImobile with a vision of harnessing India’s intellectual resources to develop an IPR centric technology company. While recognizing the potential of the rapidly evolving mobile data space, Vish was aware that fast growth was needed to keep pace with ever changing technology. Vish therefore set out to build a company which would liberate mobile operators and media companies of technological complexities thus enabling them to realize their revenue potential. Vish has extensive experience in technology and was previously involved in setting up an Indian hi-tech consumer services company in the healthcare sector. Vish is a Chartered Accountant.
Jayesh Ramesh Patel (“Jay”) (Chief Executive Officer), age 44
Jay is the CEO of IMImobile and has been working with the Company for 14 years, initially as a venture capital investor but since 2010 as Managing Director of the Group and since 2013 as CEO. He has a wide range of operational and strategic experience in growing and selling fast growth businesses. He has previously held executive positions at Spark Ventures, UBS Warburg and BSkyB. Jay qualified as a Chartered Accountant with KPMG and holds degrees from INSEAD and the London School of Economics.
Shyamprasad Subramanya Bhat (“Bhat”) (Founder & Chief Technology Officer), age 54
Bhat is a founder of the business and has more than twenty years’ of experience in engineering and new product development. He is responsible for the creation of all the engineering and mobile products and platforms. Bhat is an engineering graduate from the highly prestigious Indian Institute of Technology, Bombay.
Michael David Sean Jefferies (“Mike”) (Group Finance Director), age 36
Mike joined IMImobile in 2010 when it acquired WIN plc. Before that he worked for Star Trac Inc, a US based manufacturer and distributor of commercial fitness equipment and previous to that for Whirlpool Corporation. Mike has a degree in accounting and finance and is a Chartered Management Accountant.
Charles John Allwood (Senior Independent Non-Executive Director), age 62
John is a non-executive director of Carphone WareHouse Group PLC, TalkTalk Telecom Group PLC; he is also chairman of Romanes Media Group. He has spent his career in the telecoms and media sectors in a number of senior positions including chief executive of Orange PLC and chief executive and finance director of Mirror Group PLC. He is a governor of Exeter University. John holds a B.A. (Hons) in Economics and Statistics from Exeter University, as well as being a fellow of the Institute of Chartered Accountants of England and Wales.
Simon Paul Blagden, MBE (Independent Non-Executive Director), age 52
Simon Paul Blagden, MBE, has over 20 years’ experience in the telecoms and IT industry, living and working in most regions of the world across a truly international career. Following 5 years at GEC Plessey as International Commercial Manager and then Country General Manager, Simon joined The Quante Group as UK Managing Director. In 1995, he joined Quante’s main board as International CEO, with operations in over 50 countries worldwide, and he led the sale of the company to 3M in 2000. He was appointed a Member of The Order of The British Empire in 1997 for services to industry. He is also non-executive Co-Chairman Fujitsu Telecommunications Europe Limited. He serves as Chairman of the Supervisory Board at Pegg Capital AG. He served as Director of International Operations of Spescom Ltd and also served as Executive Director.
IMImobile enables organisations of all sizes and sectors to maximise the potential of mobile technologies to improve customer engagement. We believe that mobile will sit at the heart of customer engagement strategies for years to come.
By removing the barriers and complexities to create and deploy mobile-led customer engagement solutions as part of a multichannel framework, we provide software and services that helps organisations to improve customer experience, simplify business processes and enhance operational efficiency.
Our products and solutions built upon the IMIcloud act as an intelligent layer between existing IT systems and business processes to create,manage and launch services across mobile, digital and social communication channels.
Organisations that trust us to deliver smarter customer engagement include Vodafone, O2, Telefonica, Aircel, Airtel, EE, BSNL, AT&T, MTN, France Telecom, Centrica, Universal Music, Tata, the AA, the BBC and major financial institutions.
IMImobile is headquartered in London with offices in Hyderabad, Atlanta and Dubai and has 700 employees worldwide. IMImobile is quoted on the London Stock Exchange’s AIM market with the TIDM code IMO.