- For the 12 months ended December 31, 2021, Cartika had revenues of
approximately $1.5 million with
EBITDA of $128 thousand
- Cartika has over 200 customers, and over
95% of its revenues are recurring
- Cartika is expected to be an accretive acquisition,
and is expected to contribute significantly to
Jasper's revenue, and accelerate EBITDA breakeven
- Transaction to be funded utilizing cash on
hand, common shares of Jasper, Vendor-Take-Back, and an earn-out
payable in common shares of Jasper
VANCOUVER, BC, Oct. 11,
2022 /CNW/ - Jasper Commerce Inc. (TSXV: JPIM)
("Jasper"or the "Company"), a leading provider of
Product Information Management ("PIM") solutions, announces
it has today entered into a share purchase agreement to acquire
100% of the shares of Cartika Internet Solutions Provider Inc.
and its affiliated and subsidiary companies (Bacula4Hosts Inc. and
Cologlobal Inc.) (collectively "Cartika") (the
"Transaction"). Cartika is a full-service IT infrastructure
provider specializing in managed cloud and IaaS support for
mid-market businesses.
Transaction Highlights:
Cartika, located in Toronto,
Ontario, has 12 Full Time Equivalents (FTEs) and has been
servicing its 200+ customers since 2000. For the 12 months ended
December 31, 2021, Cartika had
revenues of approximately $1.5
million and EBITDA of $128
thousand. Over 95% of its revenues are recurring. Through
efficiencies arising from sharing customer support resources and
optimizing their hosting platform, Jasper believes it can increase
Cartika's Gross Margin by upwards of 15%, from the 40% range to
approximately 55%. Cartika's estimated long-term debt obligations,
assuming a closing date of December 1,
2022, are expected to amount to approximately $714,500 in the aggregate.
On a Pro Forma basis, for Jasper's Fiscal 2023 (ending
July 31, 2023), including eight
months of Cartika contribution, the Company expects total revenue
of $3.5 million to $4.0 million, up as much as 135% from its
Fiscal 2022 revenue guidance of $1.68
million, with gross margins on such revenue of the combined
entities estimated to be between 50 and 55%.
New revenue opportunities arising from cross selling
amongst the two Companies' non-overlapping customer bases
could provide additional upside.
"When it comes to serving small to mid-sized businesses
(SMBs), especially in the eCommerce space, having fewer technical
integrations and infrastructure to manage is key. By
leveraging Cartika's secure IaaS platform, we will now be able to
offer eCommerce merchants a fully integrated all-in-one business
management experience," said Jon
Marsella, Founder and CEO of Jasper.
Our long term vision is to utilize Cartika solutions to
develop robust self provisioning cloud hosting capability for
merchants using QuickBooks (and other on-premise accounting
platforms), combined with leading inventory management or content
management systems such as WordPress and others.
Combining these popular eCommerce back office tools with
modern shopping cart platforms, such as Shopify, Square or
WooCommerce, gives us an opportunity to reach millions of new
merchants with an even more potent single source of truth to
grow their revenues and better organize & merchandise their
products and inventories.
Eventually, as a result of this acquisition, our merchant
customers will be able to ramp up their own eCommerce business
through a single solution, all quickly and easily and at an
affordable price.
We view this acquisition as strategically and financially
accretive, having primary synergies in the form of shared hosting
and infrastructure costs, shared cross-selling opportunities
between customer bases, strong additive support (i.e., acqui-hire)
for our existing technology infrastructure team, and to jump start
our eCommerce business-in-a-box end game.
The expected result of these increased cost efficiencies and
new revenue opportunities will enable Jasper to reach positive
EBITDA sooner than our previously communicated estimate of Calendar
Q3 2023."
Sean Coutts, Chief Operating and
Technical Officer of Jasper Commerce adds:
"What we appreciate most about Cartika's CEO and team, is
their knowledge and passion for building scalable and secure cloud
hosted infrastructure for hundreds of growing businesses;
businesses that rely heavily upon Cartika to securely host and
maintain mission critical business data.
Managed services and intelligent cloud hosted applications is
a highly disciplined field. It is often executed poorly, and
Cartika has a long standing reputation for providing high quality
IaaS solutions with trusted customer service.
The Jasper technology team has a deep focus and experience
base largely in software development and elegant and intuitive user
experiences. Adding the Cartika technology team to ours will
round out our capability and provide incredible support for the
security, governance and SaaS cloud hosted platform management side
of Jasper PIM.
The integrated cloud hosted management platform Cartika has
built will ultimately become part of our own critical SaaS
architecture and enable us to offer new IaaS services to Jasper's
existing and future PIM customer base."
Andrew Rouchotas, Founder and CEO of Cartika, spoke about the
benefits of this acquisition:
"We saw an opportunity to expand our IaaS solutions to a
broader Enterprise customer base in the shorter term, and in so
doing, we became even more excited about Jasper's longer-term
vision to help bring our IaaS solutions to scale for tens of
thousands of SMB customers in the future. This is a very
interesting merger opportunity for us and I look forward to
continuing to operate and expand the Cartika business for years to
come.
Expanding into the eCommerce cloud hosting space to support
an explosive platform such as Jasper PIM was exciting for me as the
Founder and principal architect of our platform. I have
worked with many great customers for more than two decades building
highly tailored infrastructure solutions, and the prospect of doing
so in a more repeatable fashion at a larger scale for a great PIM
brand in a growing industry was very attractive to me.
Jasper has put together a world-class team culture, and as
the principal visionary behind my own business, it was important to
myself and my team to have access to great new sales/marketing
resources and other product developers not otherwise easily
available. I look forward to being a part of the Jasper team and to
providing Cartika customers an even more fulsome and robust set of
offerings over the coming years.
Purchase Consideration:
Pursuant to the share purchase agreement, Jasper will
acquire 100% of the issued and outstanding shares of Cartika in
exchange for the following consideration: (i) $300,000 in cash from Jasper's existing cash
balance (Working Capital at the end of Fiscal 2022 was
approximately $2.5 million, as
pre-announced by Jasper on August 11,
2022); (ii) $200,000 in a
Vendor Take Back, payable over three years with principal and
interest payments; and (iii) $1,050,000 in Jasper common shares at the greater
of Jasper's volume weighted average trading price for the ten
trading days prior to the closing date, and $0.50 per share; and (iv) up to
$1,000,000 over 2 years
("Earn Out" ) conditional upon revenue growth of Cartika
payable in Jasper common shares at the greater of Jasper's
volume weighted average trading price for the ten trading
days prior to the end of the applicable Earn Out period, and
$0.50 per share. In addition to
statutory hold periods, all shares issued in conjunction
with this Transaction will have a 12 month hold on them in
addition to applicable statutory hold periods. The seller of the
shares of Cartika is not a "Non-Arm's Length Party" (as such term
is defined in the Corporate Finance Manual of the TSX Venture
Exchange) of Jasper. The Transaction is subject to customary
closing conditions, including receipt of TSX Venture Exchange
approval, and is expected to close in early December 2022.
Investor Update Webinar:
The Company will host a webinar to discuss the transaction and
take any investor questions on October
12th 2022, at 1:00pm ET (10:00am
PT)
Register here:
https://us02web.zoom.us/webinar/register/WN_uItiefXSSgqbA6hRM7FEqw
Investors can send questions in advance to
all@sophiccapital.com.
A recording of the webinar will be available shortly after the
event.
About Jasper Commerce
Inc.
Jasper offers a Product Information Management
(" PIM ") solution that has the objective of
empowering eCommerce merchants to manage and merchandise their
products from a single source of truth, facilitating them to sell
more, sell faster and work smarter. Jasper's PIM is accessible from
anywhere via a web-browser and is intended to simplify the process
by which online merchants import product data into the PIM. Once
uploaded, merchants can add various product data including product
attributes, images, videos, marketing information, inventory
quantities and price books and efficiently merchandise their
products using various features that include, among other things,
the ability to adjust product categorization, pricing data and
other key metrics. Jasper's PIM also allows for automatic syncing
to popular eCommerce storefronts, marketplaces, or other connected
channels, whenever new products are added to the PIM.
About Cartika Internet
Solutions Provider Inc.
Cartika offers an Infrastructure as a Service ("IaaS")
solution, specializing in managed public and private cloud
infrastructure & support. Cartika's objective is to ensure its
clients remain compliant through IT, Governance, and Cyber
Security. Data storage and data transitions are handled securely
and efficiently using Cartika. In business for over two decades,
Cartika has gained the trust of more than 200 customers with their
client-comes-first approach, competitive pricing, and dedicated
in-house support team. Integrated backups, data recovery, and the
ability to customize are cornerstones of Cartika's service and help
set them apart from the competition.
Neither TSX Venture Exchange nor its Regulation Services
Provider (as that term is defined in the policies of the TSX
Venture Exchange) accepts responsibility for the adequacy or
accuracy of this release.
Investors are cautioned that, except as disclosed in the
Filing Statement prepared in connection with the Transaction, any
information released or received with respect to the Transaction
may not be accurate or complete and should not be relied upon.
Trading in the securities of a capital pool company should be
considered highly speculative.
The TSX Venture Exchange Inc. has in no way passed upon the
merits of the Transaction and has neither approved nor disapproved
the contents of this press release.
Forward Looking
Statements
The information in this news release includes certain
information and statements about management's view of future
events, expectations, plans and prospects that constitute forward
looking statements, including statements relating to the
acceptance of the Transaction by the TSX Venture Exchange,
the closing of the Transaction, the financial performance of the
Company on its own and on a combined post-Transaction basis, and
the business plans of the Company. These statements are based upon
assumptions that are subject to significant risks and
uncertainties. Because of these risks and uncertainties and as a
result of a variety of factors, the actual results, expectations,
achievements or performance may differ materially from those
anticipated and indicated by these forward looking statements. Any
number of factors could cause actual results to differ materially
from these forward‐looking statements as well as future results.
Although the Company believes that the expectations reflected in
forward looking statements are reasonable, it can give no
assurances that the expectations of any forward looking statements
will prove to be correct. Except as required by law, the Company
disclaims any intention and assumes no obligation to update or
revise any forward looking statements to reflect actual results,
whether as a result of new information, future events, changes in
assumptions, changes in factors affecting such forward looking
statements or otherwise.
SOURCE Jasper Commerce, Inc.