Enprise Group Limited Analysis

Overview

Enprise Group (ENS) is an investment vehicle for high-growth tech companies that complement its core ERP capability.

Enprise Group is invested in five businesses – the wholly owned companies Enprise Solutions and Kilimanjaro Consulting, subsidiary iSell, joint venture Datagate Innovation, and a holding in Vadacom.

Enprise Solutions. Enprise Solutions is a cloud business software company that is New Zealand’s number one provider of solutions based on the MYOB Advanced and MYOB Exo software platforms. MORE ABOUT ENPRISE SOLUTIONS

Kilimanjaro Consulting. Kilimanjaro Consulting is Australia’s number one implementer of MYOB’s enterprise-level business management solutions. MORE ABOUT KILIMANJARO CONSULTING

iSell. iSell is a primary provider of business systems to the IT Reseller market. iSell databases contain over 4.5 million products representing more than 2000 vendors available from 100+ distributors. MORE ABOUT iSELL

Datagate Innovation. Datagate Innovation provides SaaS Telecom Billing for IT Managed Service Providers. Datagate enables MSPs to automate the rating and billing of all telecommunications services. MORE ABOUT DATAGATE INNOVATION

Vadacom Limited. Vadacom specialises in phone system software development and unified communications solutions for Australian and New Zealand businesses. MORE ABOUT VADACOM

Enprise Group strategy: A platform for profitable growth

The business strategy behind the Enprise Group's listing on the NZX is to create a platform for profitable growth through acquisitions as well as organic growth in existing business divisions.

Major areas of focus are on providing business solutions via the cloud; extending Enprise Solutions' and Kilimanjaro Consulting's network of branches across Australia and New Zealand; building a strong CRM practice based on Microsoft and MYOB offerings; and providing customised online reporting and billing portals for telecom, utility companies and hosted service providers.

Enprise Group's strategy for its investments is to unlock mutual synergies to accelerate growth for all. Vadacom and Enprise Solutions share a significant number of customers and have a similar target market. Datagate and iSell both target the same Managed Service Provider market and can link their sales and marketing functions to give each other sales introductions. The Kilimanjaro acquisition better utilises the cloud skills and infrastructure resources already deployed by Enprise Solutions.

These interlocking characteristics are a hallmark of Enprise Group’s wider growth strategy.

Performance

The following information was extracted from Enprise Group Limited's half year report, released on 28 February 2024:

Kilimanjaro Consulting Business

Kilimanjaro is experiencing a once in a generation opportunity for growth as more and more companies turn to technology to improve efficiency. As the largest player, and a trusted brand in this highly competitive market, we are well positioned to take advantage of this. The settlement of the MYOB dispute (see 28th September 2023 announcement) has seen strong collaboration between Kilimanjaro and MYOB, with both parties working together to maximise these opportunities. MYOB’s renewed commitment to their Partner Channel model aligns well with Kilimanjaro’s goals.

Across all metrics, the business performed well during this 6-month period. These metrics include Growth in Annual Recurring Revenue, Growth in Contracted Revenue, Client Retention, and Client Net Promoter Score (CSAT).

The business continues to transition from legacy on-premise software to Cloud software. The attrition rate of existing on premise clients is about 7% per annum. The MYOB Advanced recurring revenue was 84% higher in the 6 months ended 31 December 2023 than it was in the 6 months ended 31 December 2022. The recurring revenue mix between on-premise and cloud is now about 50 / 50.

Revenue grew by 8.5% (last year 5.1%) for the 6 months ended 31 December 2023 to $9.650m. Recurring and contracted revenue grew by $0.614m (14.9%) (last year $0.474m (14.4%)) for the period. The loss in the Kilimanjaro division decreased from $0.458m last year to $0.052m in the current period.

iSell Business

Annual recurring revenue (ARR) has increased to $0.57m (up 7%). Total revenue $0.66m (up 18%). Enprise currently owns 72.51% of iSell. Litigation with the former employee was settled during the period. The ITQuoter software has continued to improve in both functionality and robustness, particularly the e-commerce capabilities allowing iSell to engage with large IT and telecommunications companies.

Datagate investment

Enprise Group’s associate, Datagate Innovation Ltd (Datagate) grew its annual recurring revenue (ARR) to over $3.3m, an increase of 22%. Growth in the USA was 20%. Datagate continues to be in high growth mode and is keeping its focus on growing revenue and market share while targeting break even. August 23 was Datagate's first profitable month.

Enprise has 2,411,024 shares in Datagate which if valued at the last rights issue price of $2.80 per share, values the investment at $6.751m. As a result of the required accounting treatment where Enprise incurs it's share of the losses incurred by Datagate from investing in and growing the business, this investment is currently held on the balance sheet at approximately $0.86m as at 31 December 2023.

Vadacom investment

Vadacom Holdings Ltd (Vadacom)’s ARR and contracted revenue was $1.82m for the nine months ended 31 December 2023. The recently released new cloud PBX phone system ‘Next Voice’ functionality continues to expand to support new and existing customers directly and through resellers. There were 2,930 users of "Next Voice" at 31 December 2023, up 78% from 2022.