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Spirit Technology Solutions is gearing up to acquire Forensic IT solutions for a total value of $9.2 million amid the announcement that it has continued to shrink its loss after tax.
Founded in 2013, the Melbourne-based cyber security firm is viewed as “highly complementary” to Spirit’s security offerings through the business’ cyber security segment, Infotrust, as mentioned in an announcement released to the Australian Securities Exchange (ASX).
By acquiring the firm, Spirit claimed it can scale its cyber security division. Specifically, the managed services provider claimed that “there are revenue and margin accretion opportunities through the acquisition by expanding its cyber capability to enable rapid response to cyber incidents”.
Additionally, all Forensics IT staff will make the transition over to the new ownership, bringing Infrotrust’s total employee count to 124. This includes director Brendan McCreesh and director of cyber and incident response Jordan Hunt, who are set to join Spirit’s leadership team as part of the acquisition.
The acquisition will see Spirit pay an aggregate consideration of $7.6 million and the issue of $1.6 million worth of ordinary shares in Spirit at an issue price of $0.05941 per share.
In order to fund the price, Spirit announced an equity raising of approximately $20 million at $0.053 cents per share, comprising of a placement to raise $2 million and a 1 for 4.024 pro-rata accelerated non-renounceable entitlement offer to raise a further $18 million.
The raising will see Spirit issue approximately 377 million fully paid ordinary shares, representing approximately 27.6 per cent of current Spirit shares on issue.
After the funds for the acquisition have been raised, anything remaining will be used by the provider for general working capital purposes.
The announcement of the acquisition coincides with Spirit’s full-year results for the 2024 financial year, with its loss after income tax shrinking by 7.4 per cent year-on-year to $10.5 million, down from FY23’s $11.3 million.
However, revenue was down by 1 per cent to $125.8 million, as was its underlying earnings before interest, tax, depreciation and amortisation (EBITDA), which fell 67.7 per cent to $1.7 million.
Sales revenue from Infotrust was up roughly 53 per cent to $51.4 million. Meanwhile, revenue for its communication and collaboration segment of Nexgen and managed services segment were both down, falling 3.6 per cent to $40.1 million and 33.8 per cent to $34.7 million, respectively.
Looking ahead to FY25, Spirit expects to see strong growth, with revenue guidance of $154 million to $164 million, with cyber security anticipated to be the largest revenue contributor.
Additionally, the provider has forecast improved profitability with expected underlying EBITDA of $10.5 million to $11.8 million.