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Inabox's Hostworks acquisition fast-tracks cloud momentum

Inabox's Hostworks acquisition fast-tracks cloud momentum

Acquisition is expected to be earnings accretive in 2018 financial year

Inabox CEO, Damian Kay

Inabox CEO, Damian Kay

IT and telecommunications provider, Inabox Group (ASX:IAB), has fully completed the acquisition of cloud-hosting, co-location, and digital media solution company, Hostworks, in a move that has resulted in the fast-tracking of its cloud strategy.

In a statement on the ASX, the company mentioned that the full integration accelerates its cloud-based offering, giving it “immediate access” into the “large and rapidly growing” cloud-based infrastructure services market.

It cited Telsyte, which predicts this market segment to be worth $1.05 billion in Australia by 2020.

“The extended offering ensures Inabox’s products and services continue to meet the growing needs of its customers as it continues to invest in providing next-generation products and services,” it stated in the report.

Hostworks, which was purchased for $7 million – comprising a $5 million upfront cash payment and a $2 million payment deferred to the 2018 financial year – is expected to be earnings accretive for Inabox in the 2018 financial year.

It also added that some of the key benefits of the integration include a growth of Inabox’s revenues to more than $110 million, with 300 staff in its first full year; an EBITDA more than its FY18; and revenues which are more than 90 per cent recurring, strengthening the combined group’s revenue model by increasing recurring revenues to 86 per cent.

This is in addition to bringing in more than 60 blue-chip customers, providing two way cross-sell opportunities, merging Inabox’s distribution capabilities with the Hostworks managed cloud platform offering, and integrating it with its other acquisitions including Anittel.

Inabox CEO, Damian Kay, said joining forces with Hostworks extends Inabox’s cloud-based offerings considerably.

“It ensures the products and services are available to our SME and corporate customers continue to meet their changing needs. As more enterprises shift from tin-to-cloud and the cloud-bases IaaS market continues to grow at a rapid rate.

“We expect to be able to leverage Inabox’s strong distribution capability with Hostworks’ managed cloud platform offering, to achieve great success for both Hostworks and the Inabox Group as a whole,” he mentioned.

In August last year, Inabox Group posted an $859,000 profit for FY16, an increase of 344 per cent from the previous financial year. Its EBITDA hit $5.5 million, exceeding guidance from the company, and was more than double EBITDA in FY15, which was $1.8 million.

At the time of writing, Inabox’s shares were trading at $1.26.

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