- Adds a leading provider of reviews, ratings, loyalty and
rewards programs for merchants in the Shopify partner ecosystem and
offers an attractive platform for growth
- Aligns with WeCommerce’s strategy to start, buy and invest
in businesses in the Shopify partner ecosystem
- Majority of the combined business’ revenue expected to be
recurring subscription revenue
- US$85 million upfront consideration, comprising US$75
million in cash and US$10 million in common shares of
WeCommerce
- Upfront cash consideration to be funded from cash on hand
and a new senior secured credit facility with a syndicate of
lenders led by JPMorgan Chase Bank, N.A.
WeCommerce Holdings Ltd. (“WeCommerce” or the
“Company”) is pleased to announce that it has signed a
definitive purchase agreement (the “Purchase Agreement”) to
acquire substantially all of the assets of Stamped.io Pte. Ltd.
(“Stamped”) for up to US$110 million (collectively, the
“Acquisition”). Stamped is a leading SaaS platform enabling
online merchants to implement and manage customer reviews and
loyalty programs through Shopify and other ecommerce platforms.
Since its launch in 2016, Stamped has grown to approximately
US$11 million annualized recurring subscription revenue1 as of the
month ending December 31, 2020, reflecting an estimated growth rate
of over 100% compared to the same period in 2019, with minimal
spend on customer acquisition. Net revenue retention1 is estimated
to be approximately 125% in the fourth quarter of 2020.
“Merchants turn to Stamped to build social trust and power
customer engagement. Stamped’s strong growth is a testament to its
product-first focus and customer obsession,” said Chris Sparling,
CEO of WeCommerce. “We are thrilled to welcome Stamped into the
WeCommerce family and are excited about its future growth
potential.”
“We could not be more excited to join WeCommerce,” said Tommy
Ong, Founder and CEO of Stamped. “WeCommerce’s management team
brings over a decade of experience developing similar businesses,
which is expected to help us accelerate growth. Amongst many
suitors, we chose WeCommerce because of their founder friendly
approach, straightforward deal structure, and focus on the long
term”
Acquisition Overview
Pursuant to the Purchase Agreement, WeCommerce has agreed to pay
Stamped an aggregate purchase price of up to US$110 million,
comprising:
- US$75 million payable in cash on closing of the
Acquisition;
- US$10 million through the issuance of 496,697 Class A common
shares of WeCommerce (the “Common Shares”) at a price of
C$25.43 on closing of the Acquisition, representing approximately
1.36% of the issued and outstanding Common Shares as of the
date hereof (after giving effect to such issuance). The price of
the Common Shares has been determined based on the 30-day
volume-weighted average trading price of the Common Shares on the
TSX Venture Exchange ("TSXV") for the period ending on March
3, 2021; and
- US$25 million payable in the first quarter of 2022 contingent
on, among other things, Stamped achieving a minimum revenue target
in 2021 of US$10 million. The contingent consideration will be
satisfied, at WeCommerce’s sole discretion, in either cash, the
issuance of Common Shares to Stamped, or a combination
thereof.
The upfront cash consideration will be funded through a
combination of cash on hand and a senior secured credit facility
(the “Credit Facility”) with a syndicate of lenders led by
JPMorgan Chase Bank, N.A. from which the Company has received
aggregate financing commitments of US$77 million. Further details
on the Credit Facility are provided below.
The Acquisition is subject to customary closing conditions,
including the approval of the TSXV,2 receipt of certain third party
consents and the other conditions set out in the Purchase
Agreement. Subject to the satisfaction of such conditions, the
Acquisition is expected to close within the next 45 days.
Credit Facility
WeCommerce has obtained commitments from a syndicate of lenders
led by JPMorgan Chase Bank, N.A. (collectively, the
“Lenders”) to provide financing of up to an aggregate of
US$77 million to partially finance the purchase price for the
Acquisition. The Credit Facility is expected to consist of a
revolving credit facility, a term loan facility and a delayed draw
term loan facility.
In addition to financing the Acquisition, WeCommerce plans to
use the proceeds of the Credit Facility to (i) finance the working
capital needs and for general corporate purposes of the Company and
its subsidiaries in the ordinary course of business; (ii) finance
future acquisitions; and (iii) repay existing indebtedness.
The commitments of the Lenders are subject to the execution of
mutually acceptable credit documentation giving effect to the terms
provided in the commitment documents between the Company and the
Lenders and the satisfaction of the other customary conditions to
closing, including the satisfaction of all conditions to the
completion of the Acquisition.
About WeCommerce Holdings Ltd.
WeCommerce is a Canadian ecommerce technology holding company
that owns a family of companies and brands in the Shopify partner
ecosystem, including, Pixel Union, Out of the Sandbox, Yopify,
SuppleApps, Rehash and Foursixty. The Company’s primary focus is to
build, grow and acquire businesses that serve the Shopify Partner
ecosystem. These businesses consist largely of SaaS, Digital Goods
and Services businesses. Generally, these businesses build Apps and
Themes and run Agencies that support Shopify merchants.
WeCommerce is focused on acquiring businesses with growth
potential, a sustainable competitive advantage and that are, or
have the potential to become, a leader within their particular
market. The Company targets businesses within the Shopify ecosystem
due to its confidence in the Shopify platform, the fragmented
nature of the ecosystem and the attractive economics that the
businesses generally exhibit. As one of Shopify’s first partners
since 2010, WeCommerce believes it is well positioned to continue
to identify acquisition opportunities in the Shopify Partner
ecosystem.
For more about WeCommerce, please visit
https://www.wecommerce.co/ or refer to the public disclosure
documents available under WeCommerce’s SEDAR profile on SEDAR at
www.sedar.com. Further information regarding the Company’s
strategic rationale for the Acquisition are contained in a
presentation prepared by the Company, available at
https://investors.wecommerce.co/.
Cautionary Note Regarding Forward-Looking Information
This press release contains statements which constitute
“forward-looking statements” and “forward-looking information”
within the meaning of applicable securities laws (collectively,
“forward-looking statements”), including statements
regarding the plans, intentions, beliefs and current expectations
of the Company with respect to future business activities and
operating performance. Forward-looking statements are often
identified by the words “may”, “would”, “could”, “should”, “will”,
“intend”, “plan”, “anticipate”, “believe”, “estimate”, “expect” or
similar expressions and forward-looking statements in this news
release includes, but is not limited to, information and statements
regarding: whether and when the Acquisition will be consummated;
the anticipated benefits of the Acquisition; the Company’s revenue
and cash flow upon completion of the Acquisition, including the
Company’s expectation that a majority of its revenue will be
recurring subscription revenue; the anticipated timing for closing
of the Acquisition; the Company’s ability to satisfy the conditions
to drawdown under the Credit Facility; the Company's belief that
the Acquisition will provide significant value to shareholders; the
Company obtaining and/or satisfying customary approvals and
conditions, including the TSXV approval for the Acquisition and the
closing of the Credit Facility; and expectations for other
economic, business, and/or competitive factors.
Investors are cautioned that forward-looking statements are not
based on historical facts but instead reflect the Company’s
expectations, estimates or projections concerning future results or
events based on the opinions, assumptions and estimates of
management considered reasonable at the date the statements are
made. Although the Company believes that the expectations reflected
in such forward-looking statements are reasonable, such statements
involve risks and uncertainties, and undue reliance should not be
placed thereon, as unknown or unpredictable factors could have
material adverse effects on future results, performance or
achievements of the Company. Financial outlooks, as with
forward-looking information generally, are, without limitation,
based on the assumptions and subject to various risks as set out
herein.
Among the key factors that could cause actual results to differ
materially from those projected in the forward-looking statements
are the following: the parties' ability to consummate the
Acquisition; the ability to receive, in a timely manner and on
satisfactory terms, all necessary regulatory, and other third party
approvals; the ability of the parties to satisfy, in a timely
manner, all other conditions to the closing of the Acquisition; the
potential impact of the announcement or consummation of the
Acquisition on relationships, including with regulatory bodies,
stock exchanges, lenders, employees and competitors; the diversion
of management time on the Acquisition; assumptions concerning the
Acquisition and the operations and capital expenditure plans of the
Company following completion of the Acquisition; credit, liquidity
and additional financing risks for the Company and its investees;
stock market volatility; changes in e-commerce industry growth and
trends; changes in the business activities, focus and plans of the
Company and its investees and the timing associated therewith; the
Company's actual financial results and ability to manage its cash
resources; changes in general economic, business and political
conditions, including challenging global financial conditions and
the impact of the novel coronavirus pandemic; competition risks;
potential conflicts of interest; changes in applicable laws and
regulations both locally and in foreign jurisdictions; compliance
with extensive government regulation; the risks and uncertainties
associated with foreign markets; and the other risk factors more
fully described in the Company's filing statement dated November
30, 2020 prepared in connection with its qualifying transaction,
which has been filed with the Canadian securities regulators and is
available on the Company's profile on SEDAR at www.sedar.com
Should one or more of these risks or uncertainties materialize,
or should assumptions underlying the forward-looking statements
prove incorrect, actual results may vary materially from those
described herein as intended, planned, anticipated, believed,
estimated or expected. Although the Company has attempted to
identify important risks, uncertainties and factors which could
cause actual results to differ materially, there may be others that
cause results not to be as anticipated, estimated or intended and
such changes could be material. The Company does not intend, and do
not assume any obligation, to update the forward-looking statements
except as otherwise required by applicable law.
In addition, Stamped’s estimates of annualized recurring
subscription revenue and net revenue retention for the period
ending December 31, 2020 are preliminary and are inherently
uncertain due to a number of factors, and remain subject to
WeCommerce’s management and Audit Committee reviews and the
completion of regular financial closing review procedures and audit
procedures for the year ended December 31, 2020. Additional
adjustments to the preliminary estimates presented above may be
identified, and final results for the relevant periods may differ
materially from these preliminary estimates and will not be
finalized until after the Company completes its normal year-end
accounting procedures, including execution of internal controls
over financial reporting. These preliminary estimates are intended
to provide information about management’s current expectations
regarding certain aspects of Stamped’s financial performance.
Reliance on the information presented herein may not be appropriate
for other purposes.
Neither the TSXV nor its Regulation Services Provider (as that
term is defined in the policies of the TSXV) accepts responsibility
for the adequacy or accuracy of this release.
Operating Metrics
Net Revenue Retention. Stamped’s net revenue retention compares
the revenue from paying subscribers in a quarter to the same
quarter in the prior year. To calculate net revenue retention,
Stamped first identifies the cohort of active paying subscribers
that were active paying subscribers in the same quarter of the
prior year. The net revenue retention is the quotient obtained by
dividing the revenue generated from that cohort in a quarter, by
the revenue generated from that same cohort in the corresponding
quarter in the prior year.
Annualized recurring subscription revenue. Stamped’s annualized
recurring subscription revenue at a point in time indicates the
amount of revenue it would expect to generate from paying
subscribers over the following twelve months, assuming Stamped
customers do not upgrade, cancel or downgrade their subscription.
Stamped calculates annualized recurring subscription revenue at the
end of a particular month by multiplying the subscription revenue
generated during such month by twelve.
Non-IFRS Measures
This press release makes reference to certain non-IFRS measures.
These measures are not recognized measures under IFRS, and do not
have a standardized meaning prescribed by IFRS and are therefore
unlikely to be comparable to similar measures presented by other
companies. Rather, these measures are provided as additional
information to complement those IFRS measures by providing further
understanding of our and Stamped’s results of operations from
management’s perspective. Accordingly, these measures should not be
considered in isolation nor as a substitute for analysis of our
financial information reported under IFRS. We use non-IFRS measures
including “net revenue retention” and “annualized recurring
subscription revenue”. Management uses these non-IFRS measures in
order to, among other things, facilitate operating performance
comparisons from period to period and to prepare annual operating
budgets and forecasts.
We are presenting these measures because we believe that our
current and potential investors, and many analysts, use them to
assess our current and future operating results and to make
investments decisions. Management uses these measures in managing
the business and making decisions. The non-IFRS measures used in
this press release are not intended as a substitute for IFRS
measures.
1 For more information on the meaning of certain non-IFRS
measures used in this press release, please refer to the
information provided under the headings “Operating Metrics” and
“Non-IFRS Measures” below.
2 The Acquisition constitutes an arm’s length reviewable
transaction under TSXV Corporate Finance Manual Policy 5.3 –
Acquisitions and Dispositions of Non-Cash Assets, and as such it
will require approval of the TSXV.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20210305005181/en/
Evan Brown, Chief Financial Officer evan@wecommerce.co
250-888-9424
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