International software company Oxford Metrics announced the acquisition of New Zealand-based motion measurement system developer IMeasureU on Tuesday.
The AIM-traded firm said the acquisition would contribute to the group's five year strategic growth plan by expanding the addressable market of its 'Vicon' offer, accelerating its ability to develop new Vicon product, opening up opportunities to cross-sell, and by further increasing the group's recurring revenue base over time.
It explained that IMeasureU had two core business lines in IMU-Research and IMU-Step, with both business lines applying the same technology but targeting different markets.
IMU-Research was described as "well-established", selling systems to researchers in the life sciences, entertainment and engineering sectors alongside Vicon.
IMeasureU and Vicon already shared a number of clients, including Harvard University, and there were "clear and immediate" applications for the technology across Vicon's client base, the board claimed.
Giving IMeasureU access to Vicon's large direct and indirect sales channels would offer "compelling" cross-sell opportunities and help to accelerate growth, Oxford added.
IMU-Step, on the other hand, sold to the elite sports market, assisting in the rehab of injured players in elite sports, including basketball and soccer.
IMU sensors are attached to the injured player, helping sports scientists to track the strain an athlete is under throughout rehab, optimise the player's training regime and minimise the time it takes to return from injury.
The business line was still at an early stage, but there were reportedly already successful pilot deployments with a number of professional teams in a variety of sports.
Oxford said the engagements were expected to result in sales on a software-as-a-service basis, giving Vicon a platform to create a "meaningful" recurring revenue base.
The acquisition comprised an initial consideration of £1.99m (NZD 3.5m) paid in cash from existing resources.
A deferred cash consideration of up to £2.89m was also payable, with 75% contingent on IMeasureU achieving a series of stretching SaaS-based recurring revenue goals and 25% contingent on growth in existing revenue streams measured over the course of a 27-month period following the completion of the acquisition.
For the full year ended 31 March 2017, IMeasureU reported revenues of NZD 0.3m, a loss before tax of NZD 0.3m and net assets of NZD 0.1m.
Oxford Metrics said it expected the acquisition to be earnings neutral for the remainder of FY17 and FY18.
Assuming the achievement of revenue goals during the earn-out period, the acquisition was expected to make a "meaningful contribution" to group profitability in FY19 and become increasingly earnings enhancing in subsequent financial years.
Commenting on the acquisition,, CEO of Oxford Metrics said:
"When we announced our five year plan last year our strategy was to amplify our core," said Oxford Metrics CEO Nick Bolton.
"IMeasureU does exactly that, adding a new growth dimension to Vicon from its already strong and profitable market-leadership position."
Bolton said the technology would expand Vicon's addressable market, mapping "neatly" to sectors already served by the company, and provide a lower price point at which a broader customer base could begin to engage with the product-set.
"IMeasureU also provides a platform to inject a meaningful SaaS-based recurring revenue stream into our Vicon business, just as we have done with Yotta, and in line with our target to triple recurring revenues over the next five years.
"This is an exciting opportunity to secure and expand Vicon's market leading status and drive long-term growth."