AD1 Holdings acquires Scout Talent Group for $65m

Technology company AD1 Holdings (ASX: AD1) will acquire leading software as a service (SaaS) talent acquisition company Scout Talent Group for an up-front consideration of $65 million, in an effort to bolster its stance as a global provider of SaaS human resources technology products and services.

AD1 chief executive officer Brendan Kavenagh said the acquisition would offer tremendous growth opportunities.

“AD1’s strategy has been focused on delivering new and attractive SaaS verticals, specifically in the global online HR talent acquisition and staff development markets,” he said.

The acquisition is also consistent with AD1’s strategy of delivering strong shareholder returns by acquiring and growing SaaS businesses within fast growing markets.

“As a growing number of organisations digitise and streamline their recruitment process, Scout’s complimentary technology is transformative for AD1 – further strengthening our offering by providing instant scale and significant opportunities with the ability to up-sell and cross-sell our existing products to new and existing customers and markets,” Mr Kavenagh added.

Scout has experienced considerable growth over the past three years, having doubled in size, achieving 45% year-on-year growth (ARR) in FY2022 and a very healthy pipeline and run rate leading into FY2023.

The growth has been attributed to its launch into North America, resulting in expansion particularly within the mid-size market.

Key player in the listed HR technology space

AD1 will leverage Scout’s internal digital marketing, software development and support capabilities to develop greater customer retention and lead generation moving forward.

With ambitions of growing Scout’s reach by a further 20% customers by the end of the 2022 calendar year, AD1 remains focused on continuing to up-sell opportunities to both businesses’ existing customer base.

AD1 chairman Andrew Henderson said the transaction is “another successful step in AD1’s vision and strategy”.

“Post transaction, AD1 will expand operations across North America, Australia, New Zealand and Europe, generating more than $30 million in revenue including fantastic cross-sell prospects into over 900 customers globally,” he said.
“This combined business platform will see AD1 become a key player in the listed HR technology space.”

Solution for in-house HR and recruitment teams

Established in Brisbane, Scout has expanded across Australia, New Zealand and North America in

recent years, with more than 800 customers and over 29,000 subscribers using its products.

“Scout is the market leader in Talent Acquisition and Management Software with strong capabilities and an expansive footprint across Australia and North America within a highly fragmented market providing opportunities to increase our customer base and expand into new verticals,” Mr Kavenagh said.

Scout has more than 70 integrations with other HR products, offering customers flexibility to meet talent requirements through providing modular based products or full human capital solutions, supported by its software development business NetEngine.

The company delivered more than $15 million in revenue in FY2022.

Scout managing director Tudor Marsden-Huggins said he is delighted to join forces with AD1.

“We look forward to accelerating our growth under the AD1 umbrella and believe the alignment of culture and values, along with our combined SaaS products and customer synergies will enhance our overall offering to become the dominant provider of HR tech products and services,” he said.