AD1 Holdings gets on acquisition trail with new SaaS deal

Shares in AD1 have risen almost 600 per cent in the 2021 financial year
Company today announces acquisition of SaaS-based platform the Art of Mentoring
AD1 will pay $1m in cash and $500k in scrip, with an earn-out agreement in place

Recruitment tech company AD1 Holdings (ASX:AD1) is gunning for growth by acquisition, announcing a new deal this morning.

The company will acquire Art of Mentoring (AoM), a Sydney-based business that works with commercial clients to develop and monitor mentoring programs in their organsiation.

AD1 will pay $1m cash up front plus another $500,000 in newly issued AD1 shares.

The deal will also be subject to earn-out payments if revenue targets are met over the first two years.

Shares in AD1 initially climbed more than 10 per cent to new 2020 highs this morning, before easing back slightly.

SaaS focus

From an investor standpoint, any demonstrated success with a software-as-a-service (SaaS) model is still regarded as valuable.

AD1 said its new acquisition, AoM, operates as a SaaS business generating around $1m in annual recurring revenues.

The company said AoM fits within the broader software market for employee experiences, which is “uniquely suited to address the growing need for structured mentoring programs”.

AD1 also flagged synergies with its existing careers platform that also operates on a SaaS model.

Shares in AD1 have been one of the standout performers in the 2021 financial year, climbing by around 600 per cent since the end of June.

The catalyst for the surge was an announcement in early July, when AD1 said its deal to run hosting and maintenance services for the Victorian government’s careers website was for an additional three years, to 30 June 2023.

Following a similar deal with the NSW government, the announcement left AD1 positioned with almost 100 per cent of its recurring revenue streams locked in on multi-year deals.

Commenting on today’s deal, AD1 CEO Prashant Chandra said the company has put a priority on generating shareholder value through earnings accretive acquisitions.

“Our complementary customer base will enable the company (AoM) to expand its footprint within both the government and professional association sectors,” Chandra said.