XPON Technologies to boost AI solutions with acquisition of long-term digital marketing partner

XPON Technologies (ASX: XPN) will acquire long-term channel partner Alpha Digital Design Consultants in a bid to accelerate its competitive artificial intelligence (AI) solutions offering.

The Alpha Digital powered by XPON deal will attract a maximum consideration of $2.61 million, comprising an upfront payment of $1.72m, a $180,000 share placement and up to $890,000 in performance earn-ins to be paid in cash or shares.

It will add an immediate $4m in recurring revenue and a $1m cash-at-bank injection to XPON’s bottom line, enabling it to fast-track the journey to positive cash flow and EBITDA profitability.

Blue-chip customers

Alpha Digital has a strong foothold of strategic blue-chip customers in key vertical industries including Target, K-Mart, QUT and Stone & Wood, generating 87% of revenue from recurring contracts.

By combining its existing solutions with Alpha’s new offerings, XPON expects to provide customers with a wider range of integrated solutions and encourage average revenue per user growth through cross-sell opportunities for both companies.

Alpha Digital powered by XPON will retain its brand and continue to operate independently, while centralising its back office and corporate functions with XPON.

There will be no changes to XPON’s board or senior management line-up on completion of the transaction.

Complementary services

XPON managing director Matt Forman said the acquisition would leverage an AI-powered approach to bring together complementary marketing technologies and services.

“Our new combined offering will create an integrated suite of advanced AI marketing solutions to help businesses acquire, retain and monetise customers with transparent and simplified procurement under a single roof,” he said.

“This is the perfect first acquisition to power our growth strategy.”

Long-term partnership

Alpha Digital founder and chief executive officer Matt Cooper said the deal would continue a long-term partnership between the companies.

“XPON and Alpha have collaborated for many years and XPON’s AI and data capabilities perfectly complement our data-driven marketing, enabling us to deliver even greater value to our clients,” he said.

“In this new era of AI-powered digital marketing, Alpha Digital powered by XPON will have a clear competitive edge.”