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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"
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.
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.
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.
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