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Accesso Technology Group PLC: THE INVESTMENT CASE

Accesso Technology boss believes Experience Engine can take it to new dimension

“They are a fantastically talented group of people doing cutting edge work in the hospitality business”
cruise ship
INVESTMENT OVERVIEW: ACSO The Big Picture
Cruise operator Carnival is one of TE2's customers

If enthusiasm for a deal is a measure, accesso Technology’s PLC (LON:ACSO) acquisition of The Experience Engine must surely be a winner.

“It really is one plus one equals three,” Tom Burnet, accesso’s chief executive told Proactive Investors.

“They are a fantastically talented group of people doing cutting edge work in the hospitality business,” he added.

Pedal to the metal

It also underlines how hard accesso is putting its foot down as it moves to capitalise on its position in the burgeoning US attractions market.

TE2 is the second major deal in US in the space of four months.

Online event ticketing group Ingresso was acquired in March for US$17.5mln.

Ingresso counts Lastminute.com and Amazon tickets among its partners and it is expected to open up larger global distribution channels for its ticketing customers.

The AIM quoted company paid £17.5mln as an initial cash consideration, with the total acquisition cost – after further payments and ‘earn out’ arrangements – capped at £28mln.

TE2 only four years old

TE2, meanwhile, was only founded in 2013 but already boasts an impressive customer list including Cedar Fair, SeaWorld, Merlin Entertainments, and cruise operator Carnival Corporation. 

Burnet admits what TE2 does is complex, but broadly it has a software platform that uses heuristic analysis to model customer behaviour during their stay and also before and after the visit.

Using this information an operator can personalise what a customer wants and specifically target information to help them have a better time during their visit.

Cost of the acquisition including debt is £62.3mln (US$80mln), which includes US$14.4mln worth of shares for TE2’s owners as well as cash from a £58.8mlm placing, which was priced at 1,620p.

Burnet says the interest was such that having announced the acquisition after the bell Thursday it had raised the £58.8mln it wanted by the opening on Friday.

Accesso has long-standing relationships with Six Flags and Merlin in areas such as virtual quieting and ticketing and believes it can speed up the adoption of TE2's solution using its customer base. 

After two years establishing the platform TE2 is now growing ‘extraordinarily’, he says and believes accesso has bought it at the ‘very start of its ‘journey’.

While giving a modest boost to earnings in the first full year, the full benefits will be felt in 2019.

Ingresso going well

A trading update accompanied the TE2 purchase.

"The integration of the Ingresso acquisition made in March 2017 continues to progress well and in line with management's expectations, while the Merlin Entertainment roll-out also continues to plan", said Burnet.

"TE2 also continues to trade strongly as expected for a high growth business, with underlying revenue growing significantly during the first 5 months of 2017."

Across the board momentum

Indeed, Burnet said there was good momentum in all parts of the business.

That includes the original virtual queuing operation in parks owned by Six Flags and Merlin, water proof smart wristbands for use in water parks and ticketing and point of sale for a range of attractions across the US.

Contract wins boost annual profits

Full-year for 2016 confirmed another strong year in what was considered an “investment phase” for accesso.

Revenue rose 10% to US$102.5mln in 2016 from US$93.2mln in 2015, slightly ahead of the US$102mln that had been forecast by Cantor Fitzgerald.

Growth was driven by a combination of new contract awards and long-term contract extensions. The group managed to bag 51 customer wins during the course of 2016.

Adjusted underlying earnings (EBITDA) jumped 25.7% to US$19.1mln from US$15.2mln, while profit before tax surged 40.3% to US$10.1mln from US$7.2mln.

 

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“They are a fantastically talented group of people doing cutting edge work in the hospitality business”

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