27 Dec 2017 | 01.11 pm
Ascential Pays Initial €100m For Clavis Insight
Earn-outs could add €84m to consideration for Dublin firm
27 Dec 2017 | 01.11 pm
The initial consideration is 9.2 times Clavis Insight’s revenue in 2016 ($13m), when the company booked an EBITDA loss of $7m. Ascential said that Clavis revenue is on track to amount to $17m for 2017.
The deal is an extraordinary outcome for founder Garry Moroney (49) and his backers and reflects the value being placed on e-commerce analytics.
Clavis Insights markets proprietary technology enabling consumer product companies to track and optimise the performance of their products across hundreds of retailer websites and mobile commerce sites globally.
The software is sold on a subscription basis, and 95% of revenue is recurring. Customers include some of the world’s largest consumer product companies, such as P&G, Nestle, L’Oreal and Unilever, with the latter also a Clavis Insights investor.
Ascential floated on the London Stock Exchange in 2016 and the business has turnover of £300m in 2016. Sixty per cent of revenue is sourced from business events and festivals such as the Cannes Lions with the balance from information services, where the plc is is now making a big bet with Clavis Insight.
Ascential said it will integrate Clavis with its One Click Retail’s Amazon sales and share product which, like Clavis, helps consumer product companies drive online sales.
“This combined product suite will constitute a globally leading eCommerce performance measurement platform, to enable both companies to provide broader capabilities to their existing customers,” said CEO Duncan Painter.
“Ascential enables its customers to improve their business performance. As a high growth business that offers synergies with our existing brands, Clavis fits well with our strategy, strengthening our e-commerce analytics offering for consumer product companies. Through combination with OCR’s offering, we will provide ever more comprehensive, accurate and actionable analytics and insight.”
Painter added that earn-out consideration is payable in cash based on the annualised recurring revenue of the business at the end of each of the next three years to 2020 and is expected to total between approximately $25m and $50m.
“A portion of the earn out is subject to founders remaining in employment with the company. The total potential consideration, including initial consideration and earn out payments, is capped at $219m in the event that extremely stretching annualised recurring revenue levels are reached,” said Painter.
Clavis founder Garry Moroney (pictured), from Dublin’s northside, had a previous home run in 2006 when Similarity Systems was bought by Informatica for €46m. At the time, it was estimated that Moroney’s gross from the deal was €5m.
When he set up Clavis Technology Ltd in 2007, Moroney availed of the Seed Capital Scheme to secure an income tax rebate on his €200,000 seed capital investment in the venture.
BES funding of €288,000 followed in 2008, with €475,000 raised using EII between 2011 and 2013. These latter investments, where Moroney contributed €200,000, were made in tandem with substantial VC investment, with a €2.1m funding round in 2009 and a €4.5m round in December 2013.
In December 2015, the date of the latest filed accounts, Clavis Technology had total equity invested of €29.4m. Accumulated losses at the end of 2015 stood at €19.7m.
Employment at Clavis grew to 66 people in 2015 from 48 the year before, with average pay amounting to €70,000 p.a. According to Ascential, Clavis currently has 170 people on the payroll, including 100 in Dublin, with hub locations in the US, UK, France and China.