Thank you very much, and welcome to everyone to have a quick discussion on our ASX release on the acquisition of Digitalk this morning. I'm joined here by Richard English, our CFO, and Niv Fernando, our Chief Financial Officer. Chief, sorry, Niv. Excuse me, guys, as my voice is rapidly going with laryngitis at the moment. Number one, I'd like to probably call out a bit of a thanks to our small team of M&A team, both with Niv Fernando and Sam Hansen. I think. The diligence they do into looking at acquisitions and working with people to find strategic and complementary businesses is paramount to Hansen's success over such a long period of time. So we're very pleased to talk specifically around this business today. So as you probably read in the announcement, we acquired 100% of Digitalk Group Holdings in the UK.
They operate in two particular spaces of the communications market, which we'll go into in a moment. The enterprise value of the transaction was EUR 33.1 million, approximately $66.4 million, and that's been funded through a combination of both cash and debt. So Digitalk will become a wholly-owned subsidiary under Hansen Technologies, and in time, will be actually run under that vertical, which is actually managed by Scott Weir, the president of our communications marketplace. Look, like all deals in Hansen, we've spent a long time looking at this business, then working with this business. And it's an interesting business because it was actually founded over 30 years ago. So. The buying off another founder-led business was actually quite complementary to us, and certainly a call out to the management, the team running a very successful, profitable, growing business in the marketplace.
It will be earnings adjusted per share amid the accretive on the business. And for the financial year '25, they did report an ordered revenue of approximately EUR 10.5 million. 90% of that was actually recurring, with a cash EBITDA of approximately EUR 3.3 million as well. So that's on a multiple—Richard, that's approximately 10 times the enterprise value of the business on a cash EBITDA basis. Their two SaaS offerings specifically is around their MVNO, which is a marketplace which is growing and expanding. And this is a fantastic opportunity for Hansen, not only with our existing customers but the customer base, which they actually have themselves, but also deal in the wholesale marketplace as well. So the two products, they own all the IP, very similar to what Hansen's always looking to, where they own their own IP and have good contracts with customers going forward. The cloud-based.
Wholesale services, etc., they have quite a large number of customers around the world. In that marketplace as they deal with all the reconciliation between carriers as they go forward. So certainly, strategically, and the reason why Niv and Sam were so interested in the business, because it's the hallmarks of what Hansen likes, is right now bullseye at the communications, its SaaS offering, own the IP, and both in growing marketplaces. It certainly expands our recurring revenue. Their revenue model's very similar to what ours is. And it certainly strengthens our cloud-first proposition. Some of the conversations we've enjoyed with the executive team of this business is how we can help them through our network and our global footprint to help expand their business beyond our shores. So at the very start, as I said, this is very complementary to Hansen's existing business at the moment now.
So we're very excited about it. I think the MVNO software businesses, as telcos around the world are looking to expand their business operations by having resellers using their network, is actually a growing marketplace for us and one which I know Niv probably sits at the very heart of our growth aspirations of this technology adding to what we're actually doing. Look, we look forward to welcoming the Digitalk team to Hansen's. We do know that we're still waiting on a small regulatory approval since one of the customers is a government-owned business in the U.K. This is just standard procedure. So whilst the announcement goes out today, the Digitalk staff all know today and will be presented tonight. But like some of these things, the official of us taking over the business will kick off probably, I think, before the end of December at this stage.
Is that about right?
Yeah.
So on that, we're very excited about the opportunity. It's, I think, once again, the time Hansen takes into be disciplined around approaches and how we've expanded our business has always played out. It does also show we're constantly talking to people because these things take some time to work their way through to make sure it's the right sort of deal. So as I said, very strategic, earnings accretive, SaaS software in our marketplace, it certainly ticked all the boxes what Hansen's actually looking for. So on that note, unless I speed read that without my voice going, which is a surprise to everyone sitting in the room, they're probably happy about it. Is there anything else we've probably added before we ask any questions? Richard.
Thanks, Andrew, and thanks for battling through with laryngitis. Just a couple of responses around the financials. So Andrew mentioned the acquisition of EUR 33.1 million. That's on a cash EBITDA multiple of 10 times. And for those that follow Hansen, we think that's a pretty compelling price to pay for a business. We are currently trading around 12, so. We're very happy to acquire a business of this quality for that multiple. In terms of the impact for FY26. Sort of high-level numbers, we're looking to close probably around mid-December. So based on that, the FY26 impact to the Hansen Group is around AUD 11-12 million, recognizing that we don't yet own the business and we're not exactly sure if it will close on the 15th, but that's just a ballpark estimate. Cash EBITDA around 3-4 million. The business is profitable and growing.
For those that have done some research already, it does have a good, strong trajectory of growth. The Hansen existing business. We've been saying for a while, growing 5-7% organically. We think this business has the potential to be at the top end of that growth, so 7% or above. And leveraging our global sales platform across all our markets, I think will help accelerate that. It's not to say that this is the last transaction. We've got plenty in the pipeline. Niv will talk shortly to some of this transaction and the work that went into it, but we have a strong pipeline. I think this goes to show that we continue to be very prudent with the way we invest shareholders' money.
We have seen many assets come across our desk over the last three or four years, and we have a pretty high hurdle for what we would be willing to transact. So. Congratulations to the team, Sam and Niv, Sam Hansen and Niv Fernando. Who about 18 months ago really kicked off. Some further pipeline analysis and have worked closely with the team over the last five months. This is a natural fit for Hansen, and we're thrilled to invite Digitalk into the Hansen Group. Maybe Niv, just a couple of quick words, and. Then we'll throw it over to questions.
Thanks, Richard. So look, I think this acquisition is right down the middle of the fairway for Hansen. It's a profitable business, cash-generative, and with high recurring revenues. It's a complementary product set, as sort of Andrew mentioned, has tier-one customers. And I think also importantly, there's a strong cultural fit. A lot of the Digitalk team have been with the business for a long period of time, so very similar to Hansen. So as we were going through the diligence with the team, had a very good sense of that strong cultural fit as well. So I think with that, we might open up to questions.
Thank you. And as mentioned, no questions.
Thank you. And as mentioned, we are now open for questions. If you have dialed in and would like to ask a question, please press star one on your telephone keypad to raise your hand and join the queue. If you would like to withdraw your question, simply press star one again. If you are called upon to ask your question and are listening via loudspeaker on your device, please pick up your handset and ensure that your phone is not on mute when asking your question. Again, to join the queue, that is star one. And your first question comes from the line of Evan Karatsas of UBS. Please go ahead.
Hi. Morning. Okay. Thanks. First one for me. Can you just sort of outline or provide some more information just how similar the software product offering of Digitalk is to the existing Hansen communications software product? And then just speak to, I guess, the cross-sell opportunity or any other synergy opportunity that you see. From this acquisition as well. Thanks.
Yeah. Hi, Evan. It's Niv. So look, the product set is actually very complementary to our existing product set. So they've got a sort of an MVNO platform that's out of the box SaaS offering, which is something that we can sort of add to our product portfolio, as well as the wholesale offering. So it's very complementary. Look, in terms of cross-sell and upsell opportunities, with that complementarity, what it means is there are some clients that we have within our portfolio that we could look to offer these products to. And I think also we can look at things like our catalog product, for example, offering that to Digitalk's existing customer base as well. So I think they're the two sort of broad opportunities.
Okay. Thank you. That's good. And then final one, just around the. Can you just speak to if there's any earnout involved or if the existing management team is staying on? Just trying to understand how the vendor lock-in or potential earnout works as well.
Yeah. There's no earnout in the business at all. I've met personally and some of the other execs of Hansen have met with the executive team, so they will just slot into normal Hansen's process. The CEO is actually still working with us. We've got him on an advisory board capacity going forward, which we're happy to because, as I said, this is probably emotional. It's 30 years in the making of this business for Justin, and he's a great operator. He sees what Hansen has. One of his attractions to what we have is just that global side to our business. We don't want to lose him completely from that advisory point of view and his contact point of view. No, there's no earnout. The management will just become career Hansen people like we normally manage, and Justin has an ongoing role.
Okay. All right. Thanks, Niv. Thanks, Russ.
Thank you.
Your next question is from the line of Josh Kannourakis. So Barrenj oey, your line is open.
Hi, guys. Congrats on the acquisition. Just a couple of quick questions from me. First one, just on customer mix. So you mentioned a little bit about the reseller market as being a big focus. Could you maybe just give us a little bit more detail around the sort of breakdown of the customer base and how we should sort of think about where it is now versus Hansen's existing customer base?
A lot of our communications customers are actually the prime - it'd be like Telstra, etc. The MVNO marketplace are people who resell off the network. So they are people who don't own the network, who resell under their own brand, and there's thousands and thousands of them around the world. So clearly, one of the opportunities we see ourselves with our own communications customers is to be able to offer them an out-of-the-box solution for resellers. So that, to us, is probably, as Niv really touched on, very, very complementary to what we're doing as well now. As far as the wholesale marketplace, there's 100-plus. So what they primarily do in simple terms is they deal with buying and selling minutes from each other. So you get off a plane, you start using the Telstra network, and you're from Telecom New Zealand.
So that's actually, once again, in simple terms, working out who owes what. And so there's that monthly reconciliation which takes place. So a lot of the major telcos around the world would use them for the wholesale reconciliation.
Got it. No, that's really helpful. Thanks, Andrew. And just in terms of. I guess, opportunity within this sort of segment of the market, in terms of the products that they've got, is there anything else? So you mentioned catalog. Being one thing that could easily slot in. Is there anything else in terms of what you view as product expansion opportunities within the suite?
Look, we probably thought initially the thesis we have, because it's such a good-run business, the thesis is, might really answer one before dealing with our own customers and saying we have an out-of-the-box because we've already got a relationship with those customers. The MVNO marketplace is a growing marketplace because the overall investment into 5G and potentially 6G. Most communication companies are trying to find other revenue sources or people to actually use their backbone of what they're doing. We've never really had an out-of-the-box solution for that marketplace. That's probably one of the exciting things we actually see. It's a global offering. One of the problems a lot of businesses have and under Justin running the business, it was UK-based.
I'd say it's a very expensive thing to try and set yourself up in America or Asia or even different parts of Europe because it's just, and that's what Hansen's going to bring to the table because we've already got that distribution network in place. I think the next step to your question is where does CPQ catalog and some of our tier-one products actually go? There would certainly be opportunities to do it. But the very first step we would actually be doing, as we always do, is let's embrace our new staff. Let's embrace the customers we've actually got. They've got a fantastic pipeline, but what we want to do is be able to provide global expansion. And even that was very clear on our thesis and certainly talking to the executive about it.
Yeah, I think that's right, Andrew. And I think for their existing customer base, it's a good story because, with Hansen as an acquirer, you're getting a business that intimately understands your space. So it should be positive for their existing customers too.
Got it. And just one final one, guys, just in terms of competition in this space, who would be the sort of big players that operate in this sort of out-of-the-box MVNO market?
It's a pretty fragmented market. So there's a number of players that sort of operate in that space. We think. Digitalk has a very compelling offering in the space with some excellent customers. So I think. It competes very well. Yeah, I think you'll find there's a few homegrown, a lot of homegrown systems out there still running. You've got the big players like an Amdocs. Nearly everyone's actually playing in this space. But as you said, we're trying to have a full suite of complementary products into the communications sector. So as I said, this doesn't cut across any of our existing products. So we're not looking to migrate them. This is all about market share for us.
Got it. Awesome. Thank you, guys. Appreciate it.
Your next question is from the line of Jules Cooper of Shaw and Partners Limited. Please go ahead.
Hi, guys. Thanks for taking my questions, and congrats on the transaction. Just the first one, you've sort of talked and you provided a bit of insight into what you expect the business will grow moving forward relative to your existing growth in the Hansen business, but could you maybe just provide a little bit more color over how it's grown over the last couple of years, and then the second question, if we're sort of building on that, is in terms of funding the transaction. Could you maybe just talk a little bit about the debt that you're going to draw down to fund this initially and just how we think about that to calculate what the impact equation is?
Okay, Jules. So growth rate. For the last few years, the business has been—well, the business has been profitable and growing for 30 years. But over the last three years, the business has grown, I think, between 8% to 10% year on year. And it's been successfully expanding into different markets. They're in over 30 countries now. So we don't see any reason why we can't continue those types of growth rates, leveraging off the back of our global sales platform. In terms of funding of the business, so you're quite right. We've increased our debt facility by, I think it's a very modest AUD 30 million. The leverage ratio for the business will be on or around 0.5 or below. And I expect that we'll start to pay that debt down very quickly over the next 24 months.
Excellent. Awesome. Thank you very much. Helpful.
And your next question comes from the line of Sinclair Currie of MA Moelis. Please go ahead.
Okay, Danny. Thanks for taking questions again. I guess I might have missed it, so apologies, but the actual sale process, was it a competitive type of process, or was this something you negotiated directly with the team at Digitalk?
Yeah. Look, I mean, we can't really go into too much detail. Sinclair, I hope you understand that sort of just from a confidentiality perspective. Look, I think the thing we can say is sort of what Richard mentioned at the top. We think we've bought a quality business. At an attractive multiple.
Excellent. Okay. That's fine. In terms of the business itself, I was just interested to understand if there's any indication of how sticky the customers are, and I guess from the perspective of the trends, if anyone were to try and transition a billing system, is it hard to actually get the data across? Does that add to a level of sort of, I guess, customer retention over time?
Yeah. Look, it's very similar to Hansen's business in that it's mission-critical software, so obviously, when an MVNO is using their platform, their entire business is being run through their software, so it's very similar to Hansen's from that perspective, and also for the wholesale market, they've had very long-term customer relationships, 10-plus years in some cases, so again, a lot of similarities at Hansen.
Okay. Thanks. And sorry, I might just squeeze one in, apologies. But just in terms of the revenue model, should I just be thinking in terms of a flat fee per customer, or is there sort of a linkage to the underlying activity of the customer just to understand how you grow with the customer or not?
It's a pretty simple model, Sinclair. So there's an implementation upfront, the same as the existing Hansen Group. And then they're on a subscriber account. So as the MVNO grows, it also increases the revenue.
Brilliant. Thanks a lot. Really appreciate you taking those questions.
And before we move on to the next question, a reminder, if you would like to join the queue, please press star one on your telephone keypad now. And your next question comes from the line of Jackson Lee of RBC. Please go ahead.
Oh, hi, guys. Thanks for taking my question. Just want to understand the sort of cost synergies. We talked a little bit about the growth synergies, but are there any sort of cost synergies you're looking to achieve? And for the 90% recurring revenue, just want to understand what the remainder of the 10% is and whether we're modeling it. Whether that will not recur for sort of 2027, 2028.
Right. Just in terms of the cost synergies, we've just acquired the business. We're in the process of acquiring the business. We're not anticipating any wholesale changes. It's a quality business. The margins are 30% plus. It's been run very, very well for a long time, so what we wanted to highlight was this slots in very nicely into the Hansen Communications suite, but we're not expecting to make any significant changes to the cost base at all. In terms of the 90% recurring and the 10% non-recurring, there is, of course, some implementation revenue that is non-recurring in nature and also some change requests that some of the larger customers require from time to time that we're not treating as recurring revenue.
Okay. Thanks.
That does conclude our Q&A session for today. I would like to turn the call back over to management for closing remarks.
Yeah. Look, thanks for joining. I think we've given you a reasonable amount of color to this business. It's very, very complementary to our business and what we're actually doing. We're pretty excited by it. It operates just out of London, so it's within close commute to our other offices over there. And we'll be really looking over the next six to 12 months to how do we expand their product offering globally through the Hansen network. So Scott, our president of communications. We'll be working very, very closely. This will be fitting underneath him to expand the business. So we think it's a great bolt-on. Well done, Niv. Well done, Sam. We're all waiting for the next one. So thank you all for joining, and I wish everyone to have a good day. Thank you so much.
This does conclude today's conference call. Thank you all for joining. You may now disconnect.