Telco swoop

Calnex acquires software developer in £3.5m deal

Tommy Cook of Calnex
Tommy Cook: strategic fit

Telecoms testing firm Calnex Solutions has acquired iTrinegy, a Stevenage-based software developer in a deal worth up to £3.5m.

iTrinegy’s customer base includes Juniper Networks, JPMorgan Chase, Ubisoft Games and the Government and Military in the UK and US.

In 2021, iTrinegy was awarded the Queens Award for Export Achievement. Linlithgow-based Calnex plans to scale the business by using its sales and marketing capabilities to build, support and grow a reseller network, particularly into the US, to accelerate sales.

iTrinegy generated revenues of approximately £1.4m in the year to 30 September 2021, with a gross margin of around 80%. Approximately 60% of iTrinegy’s revenue was from North American customers. The business is being acquired on a cash free, debt free basis.

The consideration comprises an initial cash payment of £2.5m, with up to a further £1m potentially payable in a combination of new shares in Calnex and cash.

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Calnex said it has made solid progress on delivering its strategy in the 12 months to 31 March and continues to experience high demand for its range of test and measurement solutions.

The company recently noted, in the trading update issued on 1 March 2022, that it had experienced reduced availability of certain components in the final quarter of FY22, in line with the well documented and ongoing global semiconductor shortages. The Company has successfully managed these constraints and has shipped all orders scheduled for March as planned. 

As a result of this, the board is pleased to confirm that the results for FY22 will be slightly ahead of current market expectations.Calnex’s order book continues to build and currently sits at record levels heading into FY23 which provides the Board with confidence in the group’s ability to deliver significant, sustainable growth over the coming years.

The company expects to release final results on 24 May and will provide further guidance on prospects for FY23 and FY24 at that time. The acquisition of iTrinegy is anticipated to be earnings accretive in FY23 and to be an important contributor to Calnex Group profit in subsequent years.

Tommy Cook, founder and CEO of Calnex, said: “With both businesses developing high quality, complex, technical testing solutions, trusted by some of the world’s most demanding organisations, we are particularly excited by the strategic fit of the two organisations.

“The cloud migration taking place across multiple sectors and the growth in internet-based applications is fuelling demand for test solutions that can analyse, predict and verify application performance over complex, distributed networks. We see great opportunity ahead for the NE-ONE technology and look forward to working together to accelerate iTrinegy’s growth and open up new customer segments for Calnex.

“Following a strong FY22 and a record order book heading into the new financial year, we look to the future with confidence.”

Ian McInally, analyst at Cenkos Securities, said: “iTrinegy is a good fit for Calnex, in line with the strategy articulated at the IPO, with plans to expand the sales presence to scale the business and build, support and grow a reseller network, particularly into the US.”

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