Vonex Outlines Success of Acquisition Growth Strategy

By Hannah Goldman. Published at Apr 30, 2021, in Technology

Telecommunications innovator Vonex Limited (ASX:VN8) has provided an update on its activities for the quarter ended 31 March 2021.

Supported by organic growth and a strong cash position of $3.9 million and nil debt, Vonex continued its proactive approach to acquisition opportunities during the quarter.

Having successfully demonstrated an ability to rapidly integrate 2SG Wholesale and Nextel in a way that adds value for vendors, staff and shareholders, Vonex remains very well positioned to augment its strong organic growth via selective acquisition to accelerate its growth plans.

Financial Overview

Vonex reported $630k in operating cashflow generated in Q3 FY21 from $4.1 million in receipts from customers (+45% YoY), including receipt of R&D tax offset payment of $542k.

The Nextel business, of which Vonex completed its acquisition on 3 February 2021, contributed unaudited revenue of $0.26 million during the period, which is in line with expectations.

The $315k cash component for the purchase of Nextel paid during the quarter was more than covered by the $542k R&D tax offset received in the period.

Wholesale Growth & Orange Business Service Agreement

The period marked strong continued growth and operational progress for the Wholesale Division.

In February 2021, a three year wholesale supply agreement signed with the enterprise division of European telco giant Orange Group, the Paris-listed communications and technology multinational.

The service agreement outlines the supply of business- grade mobile broadband services as part of their rollout strategy throughout Australia, serving to elevate the profile of Vonex in the market and underpins a positive growth outlook for the Company in CY21.

Orange Business Services delivers enterprise connectivity to customers in a range of industries such as the automotive, mining, oil & gas and public sectors, including Internet of Things (IoT) connectivity for transport, logistics and smart cities.

Vonex has grown to 82 mobile broadband customers through 2SG and with the addition of Orange, highlighting the Wholesale division’s growth trajectory.

Vonex’s rising brand recognition and business development profile were also supported by the integration of all wholesale services under the 2SG Wholesale name, an initiative implemented from the start of the quarter.

Alongside Orange, there was rapid growth across the Wholesale division, with orders of mobile voice services up 242% year-on-year (YoY); mobile broadband orders rising 72% YoY, and orders of NBN with 4G Backup services 101% higher than the same period last year

The company's ongoing efficiency drive has seen the Wholesale business unit identify and remove excess network costs and inefficiencies to the tune of ~$500k per annum. VN8 expects these efficiencies to take full effect in June 2021.

Looking forward, the expanding product and service range on offer for wholesale customers adds to Vonex’s ability to capture market share in a growth industry benefiting from the rise in remote workforces and the interconnectivity between traditional and home offices which provides flexibility to both employees and employers.

Nextel Acquisition

New South Wales telco, Nextel, officially joined the Vonex group on 29 January 2021.

The addition builds on Vonex’s relationships with tier-1 carriers with a list of prominent customers, including LJ Hooker, Endemol Shine Australia and Lifeline.

Acquired without debt, the financial contribution from Nextel during the quarter provided an immediate boost to earnings and annualised recurring revenue.

With Nextel having landed an infrastructure contract valued at $140k during the quarter, the business is on target to perform ahead of the revenue and profit expectations which were set when the acquisition was announced in December 2020.

The equity component of the purchase highlights the belief that the Nextel vendors have in Vonex continuing to grow the combined businesses and generating attractive returns for shareholders.

Vonex is focused on replicating the success of the integration of 2SG Wholesale into the group as it seeks to build on the immediate contribution made by Nextel. Nextel's established presence in verticals including Aged Care and Education in NSW allows Vonex to identify other needs among enterprises in these critical industries where the group can offer value. The broadened product mix and cross-selling opportunities are levers that Vonex is using to gain additional ground in the market and elevate its competitiveness.

Vonex Retail

Vonex Retail has delivered another quarter of growth. Vonex grew its number of small to medium enterprise (SME) customers by 32% year-on-year.

Total contract value (TCV) for new customer sales added in the first nine months of FY21 was $6.4 million. Although this result represents only slight growth from the same period last year, it also reflects a shortening of contract durations post-COVID.


View Our Investment Portfolios


S3 Consortium Pty Ltd (CAR No.433913) is a corporate authorised representative of LeMessurier Securities Pty Ltd (AFSL No. 296877). The information contained in this article is general information only. Any advice is general advice only. Neither your personal objectives, financial situation nor needs have been taken into consideration. Accordingly you should consider how appropriate the advice (if any) is to those objectives, financial situation and needs, before acting on the advice.

Conflict of Interest Notice

S3 Consortium Pty Ltd does and seeks to do business with companies featured in its articles. As a result, investors should be aware that the Firm may have a conflict of interest that could affect the objectivity of this article. Investors should consider this article as only a single factor in making any investment decision. The publishers of this article also wish to disclose that they may hold this stock in their portfolios and that any decision to purchase this stock should be done so after the purchaser has made their own inquires as to the validity of any information in this article.

Publishers Notice

The information contained in this article is current at the finalised date. The information contained in this article is based on sources reasonably considered to be reliable by S3 Consortium Pty Ltd, and available in the public domain. No “insider information” is ever sourced, disclosed or used by S3 Consortium.

Australian ASX Small Cap stocks | Why Finfeed.com is Australia’s leading small cap publication

Founded seven years ago, Finfeed.com is Australia’s leading and longest standing website for investor and finance news, education and expert opinion.

Published by StocksDigital, Finfeed was created to report daily on the comings and goings of ASX listed stocks in the small cap market.

As the first digital publication dedicated specifically to this space, Finfeed soon became the most trusted publication in the market, quickly garnering over two million page views – a number that continues to rise.

Finfeed.com provides its readers with informative articles that tackle the latest in market moving #ASX small cap news, plus exclusive content you won’t find anywhere else. It is aimed at those with an interest in investing, market education, company performance, start-ups and much more.

Finfeed.com is the only media organisation operating under the strength of a Financial Services License and is backed by leading journalists and analysts all with brands of their own.

The website aims to inform, educate and entertain with content that drills down into the heart of financial matters.

Finfeed is a leading source of investor and market information, with everything investors need to know about how to invest written in a way that anyone can understand. 

Over the years, the website has expanded beyond exclusively reporting on small caps, to profile Australia’s leading ASX listed small, mid and large caps as well as some of the country’s most successful CEOs and business leaders to find out what makes them tick.

Every day you will find fresh content covering:

Fast Facts

Over 4,000 articles published

Over 2.3 Million Page Views and counting

Over 10,000 followers on social media

Subscriber list growing by 2% monthly

Thanks for subscribing!

X