Preliminary Thoughts: Products LiveTiles core product is providing low code intranet for enterprises "Matchpoint" gives them two things (1) A low code intranet product for "on-premise" cloud enterprises. There are some organizations which cannot or do not wish to convert to third party cloud providers like Azure (Microsoft) or AWS (Amazon) so they build their cloud on their own in-house servers (called on-premise). These are often regulated industries who stay on-premise for security reasons. This is a market that LVT currently doesnt have a product for and they will be able to cross sell in the US and other markets which CYCL does not have reach. This opens the door to larger financial institutions (eg JP Morgan is on premise) and certain government institutions (although the US DoD has very publicly gone to Azure) (2) It provides a simpler, less flexible , less customizable , easy to install "intranet in a box" product. LiveTiles Design and Wizdom are aimed at larger enterprises which want to be able to customize their employee experience. Smaller businesses just want something they can "turn on" , It adds a product that LVT does not have. However this is a competitive space (There are quite a lot of simple intranet -in-a-box products out there lacking the sophistication of LVT Design or Wizdom). It is something that LVT should have at the lower rung of its product range. I look forward to hearing how CYCL market this, because aiming at smaller customers, you have to keep the sales process cost effective. "Condense" gives LVT a very neat ready to go mobile intranet product for field employees. Notably it is not dependent on sharepoint. Its an important product addition Recurring Revenue CYCL brings $4.7 million of recurring SAAS revenue . The $9m of other revenue is in for free or it cost very little. My guess is that some of this $9m is perpetual license revenue. It is a cultural thing. Germans prefer to buy things rather than rent them. SAAS has been slower to gain traction in the German speaking world. They have only reluctantly started to adopt cloud telephony because the German business owner likes to go down into the office basement and look at a piece of PABX switching hardware that he "owns". They like to buy and own their software rather than pay a monthly fee. LVT will be hoping to convert some of this perpetual license income into more valuable SAAS recurring revenue.. The other revenue will also include IT and systems consulting and reselling revenues. Its quite attractive revenue in Switzerland and Germany. Markets LVT gains access into German speaking Europe. That is a big gain. They also have added Regulated on premise enterprises , customers with large field forces (needing a simple platform for mobile devices ) and smaller customers. People Too early to tell Valuation The acquisition is NOT dilutive, it is actually accretive. Post the acquisition, the ARR per share is higher , the cash burn per share is lower and the earnings power higher. LVT paid 4.1X for SAAS revenue growing at 30% per year with $9m of other revenue (probably declining) thrown in for free.
LVT Price at posting:
30.5¢ Sentiment: None Disclosure: Held
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