ARMNET LTD IPO PRESENTATION JANUARY 2020 - WE DIGITISE, AUTOMATE & INTEGRATE - ONMARKET
←
→
Page content transcription
If your browser does not render page correctly, please read the page content below
We Digitise, Automate & Integrate ARMnet Ltd IPO Presentation January 2020
ARMnet Ltd
Important Notice & Disclaimer
This presentation is dated 17 January 2020 and has been prepared by ARMnet Limited (ARMnet). A.C.N. 619 705 207.
Summary of information: This presentation contains general and background information about ARMnet’s activities current as at the date of the presentation and should not be considered to be comprehensive or to
comprise all the information that an investor should consider when making an investment decision. The information is provided in summary form, has not been independently verified, and should not be considered to be
comprehensive or complete. It should be read solely in conjunction with the oral briefing provided by ARMnet and all other documents provided to you by ARMnet. ARMnet, its officers, employees, contractors and
advisers are not responsible for providing updated information and assumes no responsibility to do so.
Not financial product advice: This presentation is not a financial product, investment advice or a recommendation to acquire ARMnet securities and has been prepared without taking into account the objectives, financial
situation or needs of any person or entity. Before making an investment decision prospective investors should consider the appropriateness of the information having regard to their own objectives, financial situation and
needs, and seek legal, taxation and financial advice appropriate to their jurisdiction and circumstances. ARMnet is not licensed to provide financial product advice in respect of its securities or any other financial products.
Cooling off rights do not apply to the acquisition of ARMnet securities. ARMnet assumes that the recipient is capable of making its own independent assessment, without reliance on this document, of the information and
any potential investment and will conduct its own investigation.
Disclaimer: ARMnet and its related bodies corporate and each of their respective directors, agents, officers, employees and advisers expressly disclaim, to the maximum extent permitted by law, all liabilities (however
caused, including negligence) in respect of, make no representations regarding, and take no responsibility for, any part of this presentation and make no representation or warranty as to the currency, accuracy, reliability or
completeness of any information, statements, opinions, conclusions or representations contained in this presentation. In particular, this presentation does not constitute, and shall not be relied upon as, a promise,
representation, warranty or guarantee as to the past, present or the future performance of ARMnet. The source providers in this presentation provide data and information generally available in the market but no
assurances can be given by Armnet given it has no control over the content nor format of information and how its derived.
Risks: An investment in ARMnet securities is subject to investment and other known and unknown risks, some of which are beyond the control of ARMnet. You should have regard to the ‘Key Risks’ section of the
Prospectus and Supplemental Prospectus which outlines some of these risks.
Not an offer: This presentation is not, and should not be considered as, an offer or an invitation to acquire securities in ARMnet or any other financial products and neither this document nor any of its contents will form
the basis of any contract or commitment. This presentation is not a prospectus. Offers of securities in ARMnet will only be made in places in which, or to persons to whom it would be lawful to make such offers. This
presentation must not be disclosed to any other party and does not carry any right of publication. Neither this presentation nor any of its contents may be reproduced or used for any other purpose without the prior written
consent of ARMnet. Investment is made by completing the accompanying application form attached to the prospectus dated 20 December 2019.
Monetary values: Unless otherwise stated, all dollar values are in Australian dollars (A$). The information in this presentation remains subject to change without notice.
No distribution: Distribution of this presentation may be restricted by law. Persons who come into possession of this presentation should seek advice on and observe any such restrictions. Any failure to comply with such
restrictions may constitute a violation of applicable securities laws. This Presentation is not for distribution to retail investors.
Confidential: This document contains information that is strictly confidential. By obtaining this presentation, you agree not to directly or indirectly disclose to any person or copy, use, publish or record in any form any part of
this document.
www.armnet.com.au
2
ARMnet Ltd
Key Investment Highlights
ARMnet will be the only iPaaS Leveraged to continued global Highly experienced Board and
company for Financial sector growth in financial assets management team with
clients listed on the ASX, with under custody, administration, financial services and
global iPaaS demand growing management by financial technology industry
strongly institutions experience
Currently $100bn in assets on ARMnet’s revenues tend to be
ARMnet has a strong existing
the ARMnet Platform, with recurring in nature and are
business with high margins
over 40 corporate clients and grew by 53% from FY2018 to
and is profitable and debt free
>90% client retention rate FY2019
ARMnet’s revenue model is ARMnet’s growth strategy
evolving to a formula that involves the global rollout of The ARMnet IPO will be
considers the value of assets sales and marketing initiatives reasonably priced with FY19
and/or transactions on the which will be fully funded to EV/Sales of 3.4x
ARMnet Platform following the IPO
3
ARMnet Ltd
IPO Capital Raising
The Company was formed to acquire and be the IPO vehicle for Axcess Consulting
Group Pty Ltd, a rapidly growing and profitable Australian software company
established by existing management. The business is to be renamed ‘ARMnet Ltd’.
Feb 2020 IPO: Indicative Timetable of ASX Listing
Lodgment of Prospectus with ASIC 20 December 2019
• Planning an ASX listing at 20c at an Broker Firm Offer Open 22 January 2020
implied EV of $16.9m and raising a Broker Firm Offer Close 12 February 2020
minimum of $8.5m. Offer closes 19 February 2020
Issue of new shares 21 February 2020
• Funds raised will be utilised to:
Despatch of holding statements 24 February 2020
i. cover the cost of Axcess
Commencement of trading 26 February 2020
Consulting Group acquisition
ii. invest in the company’s Sales Use of IPO Funds (min raise)
and Marketing function to Acquisition of Axcess Consulting $4.0M^
accelerate revenue growth and Sales & Marketing $1.1
iii. invest in product configuration IPO Transaction Costs $0.9M
iv. expand existing presence in the Accrued Costs $0.69M
UK and North America.
Working Capital $2.3M
^ Less $635K adjustments to Purchaser upon completion
4
ARMnet Ltd
Summary IPO Statistics
Key offer statistics ($0.20 IPO price)
Shares to be held by IT vendors 55,000,000
Shares to be held by founder, directors,
32,496,912
management and investors
Minimum IPO Raise $8.5M 42,500,000
Maximum IPO Raise $11.0M 55,000,000
Total Shares on Issue post IPO (min/max) 129,996,912 – 142,496,912
Fully Diluted Market capitalisation at issue
$25,999,382 – $28,499,382
price of 0.20 cents (min/max)
Enterprise Value $16.9m
Free Float (Min/Max IPO Raise) 43.3% to 48.3%
5
ARMnet Ltd
What We Do
Who we are
ARMnet is an innovative cloud-based integration and processing software platform to the financial services sector worldwide.
What problem do we solve?
Financial institutions utilise multiple systems across a wide range of functions, and as most of these systems can’t or often won’t talk to
each other, this creates delays, costs and errors.
How we solve this problem
The ARMnet Platform translates, integrates and automates data ingested from different software systems and sources via the cloud and on-
premises (such as finance, sales and marketing and customer support software applications) to allow multiple systems and processes to
work together for our clients in a unified way for their data and information use. This also empowers them with the ability to originate,
service and report on multiple financial asset types from one consolidated platform and single interface.
“In iPaaS we find the groundwork being laid for a digital
future as the products in this segment are lighter more
agile IT architecture suited for the rapidly evolving use
case around digital business...
...pure play iPaaS providers...are challenging the
dominant position of traditional vendors”
Bindi Bhullar, Research Director at Gartner June 2018
6
ARMnet Ltd
What Makes Us Unique
The concept of integrating applications has existed for years. But for most companies, integration is an afterthought. New
applications are added, but integration projects are tackled on an as-needed basis. When they ultimately do move
forward, companies often use a patchwork of integration strategies.
What makes us unique?
• A fast, secure and highly scalable solution.
• Offers rapid deployment with low software coding and reporting to any smart device.
• Eliminates human touch points in product processing stages.
• Saves costs, increases revenue generation and cuts time.
• Has multiple translation and workflow engines to offer data collection and
speedy processing.
• Tracks and reports processing touch points across the front, middle and back office.
• Offers its clients analysis, business intelligence and flexible reporting metrics.
iPaaS
7ARMnet Ltd
Why IPaaS Is Important
Why IPaaS? About IPaaS (or Integration-Platform-as-a-Service)
iPaaS is a cloud-based alternative to traditional forms of data
✓ A centralized connectivity point integration via a private or hybrid cloud.
✓ Breaks down business silos IPaaS customers get a single, holistic source of data throughout
✓ Offers greater efficiency and productivity multiple applications and business processes—without a significant
investment of time and capital to purchase and configure data
✓ Improved decision making integration software internally.
✓ Increased speed to market and delivery
What is iPaaS used for by Companies?
✓ Higher security and governance tracking
iPaaS exchanges data between and among a company’s applications
✓ Real time information and alerts (e.g., using the same source data within both ERP and CRM systems)
or as an exchange of data externally with business partners, as an
alternative form of EDI (electronic data interchange).
iPaaS? In the API Economy – Be the Open Platform
What are the benefits of iPaaS?
Data integration is a critical business objective giving greater
efficiency and consistency across an organization. Data in silos
prevents the organization from achieving critical business insights
and costs money and time in maintaining disparate systems and
data.
Why use iPaaS?
iPaaS is used where data integration is absent or insufficient.
It provides for a rapid improvement in the quality of data integrated
and reuse of data. It offers greater consistency across the
organization with little configuration, deployment, and optimization
with lower costs spent.
8ARMnet Ltd
Board & Executives – Over 300 Years Of IT & Financial Sector Experience
Nick Brookes Nick has significant experience in successfully managing growth businesses in trusteeship, managed funds and superannuation
Non-executive with 30 plus years experience. Nick is a former founder of CCSL and was more recently the Chairman of Linear Asset
Chairman Management Limited which oversees Linear’s Platform and Administration solutions to the Financial Services industry. Nick holds
a Master’s Degree from the Melbourne Business School and a Graduate Diploma in Applied Finance & Investments, he is also a
Fellow of FINSIA and is currently studying for a PhD in Fintech.
David Grey David has over 30 years management, corporate and trust experience and worked on various cross border transactions in
Managing Director Germany, the US, Britain and Singapore and has been directly involved in the development, restructure and merger and/or
acquisition of various companies. David worked as a management accountant for nearly 10 years including with AWA Ltd and
Texas Instruments. He also worked for National Benefits Consulting, AM Corporation Limited, Millinium Capital Group, AMP
Superannuation Ltd, CUSCAL, Perpetual Trustees Australia Ltd and Australian Wealth Management Ltd (AWM) part of IOOF
Limited. He is a former senior executive for a number of AWM subsidiaries and he undertook the key role in AWM’s 2005 listing
on the ASX. Mr. Grey holds qualifications in accounting, a post-graduate in law (Dean’s Prize Winner) and is a member of the
AICD. He has been part of the strategy and design of many brand name products used by former clients and has completed
various technology program integrations and developments in superannuation and managed funds and wrap platforms.
Brendan Dickson Brendan has over 20 years' experience in financial markets encompassing roles in funds management, stockbroking, and foreign
Non-executive Director exchange. Brendan holds a Bachelor of Commerce and Australian Stock Exchange Accredited Derivatives Adviser Level 1 and 2
and PS 146. He worked for firms such as Deutsche Bank Sydney, Macquarie Bank Sydney, Deutsche Bank London and Ord
Minnett. Brendan will assist with financial market analysis and broker support to the Company. Brendan has a strong
understanding of financial markets and instruments and this will assist with the implementation for certain financial services
clients and their products.
Alan Beasley Alan has worked in the Investment Banking and Investment Management industries for over 30 years, with Bankers Trust
Non-executive Director Australia, Goldman Sachs Asset Management, Massachusetts Financial Advisors and BNP Paribas Asset Management Ltd - the
last three positions as Managing Director and Australian Country Head. Alan is a director and former director of several listed and
unlisted public and private companies including two public charities. Alan holds a Bachelor of Economics and completed an
Advanced Management Program in International Investment Management, from the Graduate Business School, Stanford
University, Palo Alto California, USA. Alan is a Certified Practicing Accountant (“CPA”), Fellow of the Governance Institute of
Australia (“FGIA”), and Fellow of the Australian Institute of Company Directors (“FAICD”).
9ARMnet Ltd
Executive Team
Laurie Atkinson Laurie is a senior IT executive with over 30 years of experience working in the financial services and technology sector. Laurie is
Head of IT Delivery currently an Executive Director of Axcess Consulting. Prior to joining Axcess Consulting, Laurie worked both in Australia and the
UK consulting and lecturing as a network and communications specialist. Since joining Axcess Consulting, Laurie has been
responsible for the delivery and management of ARMnet in over forty sites in Australia and internationally including Canada,
Ireland and the UK. This includes a diverse range of clients delivering services in areas such as mortgage origination and servicing,
securitisation, investments and syndicated commercial lending. As head of ARMnet’s delivery team, Laurie’s key role is analysing
the business requirements and processes of the customer and liaising with the development team to design a technical solution.
Alison Crealy Alison is a Big-4 trained finance and M&A professional with extensive international commercial and company secretary
CFO experience. She holds a Bachelor of Business (Accounting & International Business) from UTS, a Grad Dip from Chartered
Accountants Australia and New Zealand and a Grad Dip of Applied Corporate Governance from the Governance Institute of
Australia. Alison is a member of the two organisations as well as the Australian Institute of Company Directors. With over 20
years in finance and accounting, Alison has gained highly developed finance analysis skills, thorough knowledge of accounting
and is a qualified Company Secretary.
Ivan Colak Ivan is a co-founding partner and director of Axcess Consulting Group and an accomplished financial services executive with
CTO more than 30 years of domestic and global experience in technology services. He is an expert in developing innovative
technology services and strategies that have successfully delivered tailored business solutions to an increasingly demanding
marketplace. Prior to setting up Axcess Consulting Group, Ivan had worked as a senior developer and consultant in some of
Australia’s leading banks including ANZ, NAB and was CIO of Farrow Corporation. Ivan holds a Bachelor Degree in Computer
Science and Mathematics from Deakin University.
Kelvin Poole Kelvin has over 40 years of executive in lending and banking and is a founder and an executive director of Axcess Consulting.
Head of Client Services Prior to establishing Axcess Consulting, Kelvin held numerous senior management positions within large Victorian lending
institutions such as the State Bank of Victoria and the Farrow Corporation including being appointed National Lending Manager.
Kelvin’s vast lending experience played a significant role in the initial development of the ARMnet software platform and its
success in the Australian and International markets.
10ARMnet Ltd
Our Journey So Far - $2B to $100B in 14 years
• Proprietary owned software platform with open architecture capabilities. Over 40 clients
• Software developers are highly experienced and are Shareholders in the business. using ARMnet
globally with
• Highly scalable delivery of core products through cloud-based iPaaS. Strong recurring $100bn on the
annuity revenue streams contributing approximately over 50% of total revenues in FY19, platform
growing to an estimated 69% in FY20. Signed up
4th largest
• Becoming ready for digital transformation in an accelerated market by
insurer in 2019
using our software platform.
Canada
Operating in
2018
4 countries
1st Asian client Recent
€95M now contract wins:
1st European €165M 2016
Savri
client with
Metrix Partners
€800M now
15 clients with 1st Canadian 2012 Folio
€15B
$2.1B on client with
platform in 750M CAD
Australia and now 23B CAD 2010
secures 1st US
ARMnet client
2007
goes live
2005
2004
11An Evolving Pricing Model – Now Leveraging our Pricing to Client ARMnet Ltd
Assets
• Historically ARMnet Platform pricing has been as a pure software licence fee offering generally multi-year contracts –
this has left a lot of $$ on the table.
• For example, ARMnet is currently employed by a customer administering $8.9bn of assets but only paying us $108k
for software licence = opportunity to harvest more revenue.
• Going forward we are migrating our pricing regime: still software licence model but now leverages ARMnet better to
a combination of 3 factors: $$ value of assets on the platform, a transaction component and gain-share for customer.
• We have already begun to roll this out: in Feb 2019 we signed Canada’s 4th largest insurer Industrial Alliance
Insurance & Financial Services Group (iA) to a 3 year agreement for rollout of ARMnet for iA’s new loan origination.
• We received approval from the Canadian Housing and Mortgage Corporation Canada – the Canadian Government’s
primary authority on mortgage and housing in Canada for ARMNET – which means we can target any lending
institution in Canada.
The revenue impact of this model is very significant – for example: if all legacy contracts were migrated to the iA
contract pricing model the existing $100bn in assets on the platform would yield revenue closer to ~ A$95m. vs
actual revenue of $4.92m in FY19.
12ARMnet Ltd
Growth Outlook
ARMnet enjoys considerable macro tailwinds and strong revenue growth is forecast & multiple factors underpin this
outlook.
Grow Sales Force
New appointments for Head of Sales positions in Canada, UK, Australia and
Singapore to target the aforementioned large identifiable global markets.
Revenue in FY20
forecast to grow 52%
vs FY19
Pricing Review
$ Transition existing clients to market prices & structure to give leverage to $$ value of
assets on the ARMnet platform.
Recurring Revenues
to represent an
estimated 69% of
Market Demand total Revenue
Constant cost pressure on CEOs to find better IT solutions combined with relentless growth in
financial services’ AUM / AUC / AUA.
Existing $100bn of
assets on ARMnet to
Technology Advances be harvested as
Many clients’ systems will require a new strategy to integrate the cloud & to cope with advances in
product development, digital commerce and distribution strategies which our technology can assist. contracts renew
13ARMnet Ltd
Customer Base – Traditionally Non-Bank Financial Institutions but Now
Expanding
• ARMnet Platform is used by over 40 corporate clients in 4 countries.
• Top 5 clients account for 42.9% of total revenue.
• Our biggest client and latest major client contract – iA - accounts for 18.8% of total revenue.
• Historically have targeted Non-bank mortgage sector but going forward the ARMnet software is suitable for a much wider range of
financial institutions and asset managers given software capabilities.
• Exceptional client retention rate of >90%.
• Well positioned to target customers in North America, and Europe with offices already established & winning business.
Selected ARMnet clients in Australia and International:
The regions only integrated provider of Via ARMnet, Paradigm Quest BPO is Via ARMnet, Pepper Ireland manages a
Loan Servicing, Corporate Trust & managing CN$23bn in Residential EUR15bn residential and commercial
Agency Services with >A$9bn FuA Mortgages for a group of 12 Insurers mortgage & loan portfolio for multiple
and Finance companies in Canada financial institutions
One of Australia’s leading commercial A top 4 Canadian Insurer and Wealth Australian real estate investment
real estate debt and investment Management Group with CN$187bn in management firm with FuM of A$2.2bn
specialists with A$4.1bn in FuA+A Assets made up of debt and real estate equity
Boutique mortgage investment firm Managing a multi billion portfolio of Digital banking subsidiary of ManuLife
specialising in commercial real estate mortgages and loans for multiple with CN$22bn in Assets and offering
loans and purchasing. Participation in financial institutions in UK, Ireland, deposits, credit cards and mortgage
and servicing of a $150+ million Australia & NZ products
commercial loan portfolio
14ARMnet Ltd
Why They Use It – We Enable Material Cost Savings & Efficiencies
ARMnet Platform drives tangible client success: enabling lower headcount, Automation, Simple Management, No Hard
Coding, Low Level Skills required to Amend / Change the System.
• A case study of the results achieved by one of our North American clients Paradigm Quest which implemented ARMnet:
• 40-60% reduction of manual activity of operating teams.
• Reduced processing time from 4 days to 4 minutes.
• 60% reduction in staff from 10 to 4 with $500k savings per process team per annum.
• Substantial process volume increases due to reduced turnaround times via automation using ARMnet.
• Enabling high volume increase in Paradigm’s sales revenue.
• Client grew from 15th largest to become #2 ranked Business Process Outsourcer in Canada.
Paradigm was the first Business Process Outsourcing (BPO) Company dedicated to
mortgages in Canada & currently provides services for 17 mortgage brands and managing
over $25 billion in residential mortgages across Canada.
Key Takeaways:
ARMnet was selected via a competitive tender from over 30 global providers beating out: ARMnet allowed the client to:
• Fiserv • Materially reduce headcount
• Fidelity National information Service (FIS) and • Cut processing times
• IBM, amongst others. • Increase sales volumes
15ARMnet Ltd
Our Client’s Varying Needs
Client 1 – Completely eliminate 4 business silos and 28 systems
Outcome:
Client reduced
costs, saved time and
Step 1 Map client Step 2 Determine Step 3 Integrate and Step 4 Automate and Step 5 Reduce to single
increased revenue
manual and IT workflows of client to collapse 28 separate eliminate manual output system for processing
processes originate and service systems and processes processes reporting and data use 1000%
lending processes
Client 2 – Examples of Clients system outcomes
Outcome:
Reduced cost
and manual
Step 1 Map client Step 2 Implement and Step 3 Decommission Step 4 Automate and Step 5 Provide single errors, higher
manual and IT refine new broker existing origination and eliminate manual system with French and margins to client
processes portal for business broker platform processes English versions for roll brokers
origination out
Client 3 – Decommission banking and debt product systems
Outcome:
Reduced costs
and savings in IT
Step 1 Map client Step 2 Determine Step 3 Decommission Step 4 Automate Step 5 Provide single and increased
manual and IT workflows and business banking system and functions and eliminate central system and productive
processes needs other systems for manual processes compliance rules and
different products tracking
16ARMnet Ltd
Our Product and Solution Offerings
Platform Product Solutions
Straight through processing solutions for the initiation, management and exit of any asset class utilising automated features that reduce
manual handling and delays.
Mi-
Mi-Lend Mi-Invest Mi-Structure Mi-Loyalty Mi-Finpro Mi-Archive
Wealthcheck
Service Solutions
Provide disruptive IT solutions to combine and integrate a client’s existing Mi-Lend
incompatible or inharmonious software solutions to produce one output system.
Mi-Structure
Current Mi-Loyalty
Sales Mix Mi-Optimyz
Mi-Optimyz Mi-Deploy Mi-Service Mi-Deploy
Mi-Service
17ARMnet Ltd
Illustrative Contract Economics
18ARMnet Ltd
Digital Transformation = SaaS taking over the world
A huge opportunity for ARMnet SaaS is dominating global software industry growth
US$m Global software Industry Revenue 1970-2021
▪ Software as a service (SaaS) is a software
distribution model in which a third-party
provider hosts applications and makes them
available to customers over the Internet.
▪ Currently SaaS is a ~US$200bn opportunity
generally and growing at tremendous rates
▪ Over the 40 years to 2021 the ‘On-Premise &
Mainframe’ software sector global revenues
are expected to reach ~US$250bn, but SaaS
sector revenue has taken less than half that
time to reach similar levels
▪ Digital Transformation is driving this rapid
SaaS sector growth and companies are now
employing an enormous array of applications
– this is a problem we can help solve!
Homegrown internal software On-Prem & Mainframe SaaS
Source: Bailador Technology Investments
19ARMnet Ltd
Proliferation of SaaS apps requires integration = IPaaS
▪ The average enterprise (ie +1000
people) organization deploys a
staggering 3000+ applications
▪ Even small and medium sized
business (SMBs) operate an
average of 93 SaaS and on
premise applications
▪ The average number of
applications that a business uses
is rapidly accelerating as more
vendors provide tools and
infrastructure needed to simplify
application development and
build web-scale products - How to
make them work in harmony?
Source: 2019 Intricately Cloud Market Report
20ARMnet Ltd
The Addressable Market
ARMnet is targeting a >US$2.75bn
market growing at double digit rates
▪ Our historical focus has been on non-bank
lenders and the bulk of our 40+ customers
are in this segment
Global Enterprise Software
▪ They, like other Enterprises, deal with a Spend US$4.0tn
multitude of SaaS products that are not
cohesive +9% in 2019E
ARMnet is now targeting financial services sector
Financial Services
more broadly, particularly insurance companies Enterprise
and asset managers software spend
$US440bn
Fin Services
▪ This dramatically expands target set e.g. in Application &
Europe and US there are ~15,000 insurance Middleware spend
spend FY18A
companies we are not touching, in Europe US$40.8bn
alone there are ~4,200 asset managers
Financial Services
iPaaS only spend
▪ Gartner estimates the iPaaS market in FY18A US$2.75bn
financial services sector in 2018A was
$2.75bn
▪ iPaaS is generally regarded as the fastest
growing segment of the software sector
and is growing at double digit rates Asset based fees
according to Gartner are upside to this Source: IPC, various reports
spend 21ARMnet Ltd
Historical & Forecast Revenue
▪ Pro-forma revenues of $4.9 million for FY2019, an increase Historical Revenue
of 53% on FY2018
A$m
▪ Annual client revenue ranges from $12k to $500k plus /
client.
▪ History of strong client retention >90% and strong recent
momentum in new contracts.
▪ Ongoing Licence fee annuity stream continually growing
as percentage of revenue & accretive to margins.
▪ Migrating revenue model to include asset based fees.
Current
Revenue Type Description Split
Subscription & Ongoing software fee 50%
Licensing (recurring) from the client
Implementation & One off as requested 44%
Personalisation by client for a
new/existing product
implementation
upgrade or change
Other Technical support 6%
Sales & Marketing as 2017 2018 2019
% of Revenue 12.8% 8.7% 5.6%
EBITDA ($M) -$0.33 $0.13 $0.61
R & D as expense % 2017 2018 2019
of Revenue 9% 13% 9.8%
NPAT ($M) -$0.70 -$0.22 $0.32
G & A as expense % 2017 2018 2019
^ Indicative, subject to final Investigating Accountant’s Report
of Revenue 38% 42% 51%
22ARMnet Ltd
Summary Investment Highlights
ARMnet will be the only iPaaS Leveraged to continued global Highly experienced Board and
company for Financial sector growth in financial assets management team with
clients listed on the ASX, with under custody, administration, financial services and
global iPaaS demand growing management by financial technology industry
strongly institutions experience
Currently $100bn in assets on ARMnet’s revenues tend to be
ARMnet has a strong existing
the ARMnet Platform, with recurring in nature and are
business with high margins
over 40 corporate clients and grew by 53% from FY2018 to
and is profitable and debt free
>90% client retention rate FY2019
ARMnet’s revenue model is ARMnet’s growth strategy
evolving to a formula that involves the global rollout of The ARMnet IPO will be
considers the value of assets sales and marketing initiatives reasonably priced with FY19
and/or transactions on the which will be fully funded to EV/Sales of 3.4x
ARMnet Platform following the IPO
23ARMnet Ltd
Peer Group Valuation for SaaS Related Peers
Enterprise
Value $m FY19A EV / FY20E EV
Name Code Business
Sales / Sales
Elmo ASX: ELO Integrated cloud human resources, payroll and rostering / time & attendance software $486 11.8x 8.9x
Bigtincan ASX:BTH Sales enablement automation platform $206 9.0x 6.9x
Superannuation, pension, life insurance, investment, wrap, private wealth and funds administration
Bravura ASX:BVS software
$11933 3.0x 4.0x
Workplace management solution for real-time data monitoring for risk, compliance and auditability
Damstra ASX: DTC regulations
$151 10.7x 7.1x
Readytech ASX:RDY Software for tertiary Student management & profiling + employee management $180 4.7x 4.5x
Fineos ASX: FCL Admin software solution for the life, accident & health insurance industry $451 7.6x 6.4x
LiveTiles ASX: LVT Low code enterprise software creation tools $217 13.2x 4.6x
Accounting software to automate processing & enable digital SMSFs; cloud-based administration
Class ASX:CL1 software for SMSFs
$224 5.7x 5.4x
Praemium ASX:PPS Investment management and administration software $212 5.3x 4.3x
Whispir ASX:WSP Platform to consolidate communications channels like email, text messaging and web chatting $125 4.6x 3.3x
Service Now US: NOW Platform for delivery of digitised enterprise workflow $58,123 20.3x 16.9x
ASX Median 6.7x 5.7x
ARMnet
iPaaS application integration software for non-bank lenders,
(@min IPO $16.9m 3.3x 2.2x
insurers & asset managers
raise)
24
Source: Bloomberg, Company Reports, ARMnet prospectusARMnet Ltd
Detailed Capital Structure
Minimum IPO: Maximum IPO Notes
Securities % of Total Securities % of Total
Existing Shares:
Existing shares on issue 32,496,912 25.0% 32,496,912 22.8%
Vendor Shares 55,000,000 42.3% 55,000,000 38.6%
Total Existing Shares 87,496,912 67.3% 82,809,412 61.4%
New Shares:
IPO Raising 42,500,000 32.7% 55,000,000 38.6%
Total Shares on Issue 129,996,912 100.0% 142,496,912 100.0%
Fully Diluted Market Cap: $26.0m $28.5m
Enterprise Value: $16.9m $16.9m
Other Securities:
Performance Options:
Class A 4,838,235 4,838,235 Exercise price = 25c; EBITDA >$2.9m in ‘21 or ‘22
Class B 3,350,000 3,350,000 Exercise Price = 35c; EBITDA >$3.7m in ‘21, ‘22 or ‘23
Class C 5,000,000 5,000,000 Exercise Price = 50c; EBITDA > $5m
Total Performance Options 13,188,235 13,188,235
Other Options:
Existing Options 3,546,646 3,546,646 Exercise Price 25c; Expire 31 December 2020
Pre-IPO investors 2,343,751 2,343,751 Exercise Price = 30c; 36 month term
Alignment Options 5,963,022 6,463,022 Exercise Price = 30c; 36 month term
Total Other Securities 25,041,654 25,541,654
Total Securities on Issue 155,038,566 168,038,566
25ARMnet Ltd
Escrow Arrangements
Type of # Months
Shareholder Escrow1 Minimum Subscription Maximum Subscription Options Escrowed
Directors & Related
ASX 7,457,227 5.7% 7,457,227 5.2% 13,188,235 24
Parties2
Promoters, Seed &
ASX 11,232,747 8.6% 11,232,747 7.9% 4,605,481 24
Others3
Employees Voluntary 56,000 0% 56,000 0% 0 24
Vendors ASX 55,000,000 42.3% 55,000,000 38.6% 0 24
Total Escrowed 73,689,974 56.6% 73,689,974 51.7% 24
Total Shares at
129,996,912 100% 142,496,912 100%
Completion of Offer
Free Float 43.4% Free Float 48.3%
1. Escrow arrangements are subject to the ASX’s final determination on final percentages.
2. Options based upon Class A - 4,350,000 @ 0.25 cents based on achieving an EBITDA in excess of $2.9M in either 2021 or 2022 years | Class B – 3,465,734@ 0.35 cents on achieving EBITDA of $3.7 million in
either FY2021, FY2022 or FY2023| Class C - $5,000,000 @ 0.50 cents exercisable on achieving an EBITDA of $5,000,000.
3. Bridge Street Capital and other promoters will receive alignment options at a strike price of $0.30 with a 3-year term.
26ARMnet Ltd
Appendix 1: The ‘… as-a-Service’ Environment | Where We Fit
Software-as-a-Service Infrastructure-as-a-Service Integrated Platform-as-a-Service
SaaS IaaS iPaaS
SaaS allows users to connect to and use In an IaaS model, a cloud provider hosts the iPaaS offers a set of automated tools and
cloud-based apps over the Internet infrastructure components in an on-premises applications that connect software
(examples are Microsoft Office 365 and data centre, including servers, storage and applications or is used by larger business-to-
Salesforce). networking hardware. business enterprises that need to integrate
on-premises applications and data with cloud
SaaS is a complete software solution on a A business can simply rent or lease that
applications and data.
pay-as-you-go basis from a cloud service infrastructure from another business to save
provider. cost and time or need to manage and We are
support the underlying infrastructure. here
Control of infrastructure, middleware,
app software and app data are located in
the service provider’s data centre and
software owner. Software
vendor
Software
Vendor SaaS
IPaaS SaaS
integrates
IPaaS
Platform for
integrates
with SaaS, Platform
software for
with PaaS
PaaSSaaS,
and development
development
as aaservice
vendor
PaaS
PaaS and
IaaS
IaaS
Infrastructure
Infrastructure
as a service
as
for athe
service
cloud for IaaS
IaaS
the cloud
27ARMnet Ltd
Appendix 2: Integration = ARMnet
Simpler next gen integration tools now required =
ARMnet
▪ Concept of integration is not new: In each new era of
business applications – Mainframe, Client / Server, ASP,
SaaS etc., a new set of technologies appeared to connect
the apps that emerged.
▪ This design approach meant integration solutions
themselves were a generation behind the design of the apps
they were built to connect.
▪ 1st gen iPaaS solutions were developed in response to 1st
gen SaaS apps when IT depts mostly owned & managed all
of coy’s systems & apps – so iPaaS was developed solely for
technical professionals trained in the platforms.
▪ BUT as # of apps has exploded IT has been decentralised -
users at the coal face are now empowered to decide on tools
to best tackle business challenges.
Business processes Legacy IT Depts being Simpler tools for line of
always changing left behind business users
Today processes need Legacy IT Depts rarely New approach required to ✓ Low Code
continuous modifications. capable of managing this iPaaS, to make it easier to
Market opportunities + change & integration to build complex integrations,
threats appear rapidly, automate business processes while offloading integration ✓ Scalable
employees transient. become critical management from IT to line
Customers expect perfect
responses. New apps become
of business users, guiding ✓ Drag & Drop
users through integration
prominent and others
disappear. ✓ Any device
28You can also read
