Pinned straw:
Felix announced today that they are acquiring a SaaS platform to integrate into their current offering. They have so far concentrated in monetising Enterprise clients and have achieved moderate success to date i=with 20-25% CAGR in ARR and are now CF+ve.
This move aims to monetise the vendors (the SME submitting tenders for big projects)
Key highlights
- Felix has entered into a binding agreement to acquire 100% of the issued capital in Nexvia, a Brisbane-based SaaS platform for construction-focused SMEs
- Acquisition accelerates Felix’s Vendor monetisation strategy, unlocking a significant opportunity across its ~110,000-strong Vendor Marketplace
- Acquisition delivers FY25 pro-forma ARR of $11.9m, a 38% increase on Felix’s standalone FY25 ARR
- Purchase price of $12.0m, comprising $6.0m cash, $3.6m in Felix shares, and $2.4m in performance rights linked to FY26 subscription revenue growth targets
- Acquisition to be funded via a fully underwritten two-tranche placement to raise approximately $16.0m and a non-underwritten $1.0m share purchase plan
- Global investment manager, Briarwood Chase Management LLC and its private investment fund, Briarwood Capital Partners LP, has provided strong support for the Placement and is expected to hold a ~16.1% pro forma shareholding
- Integration plan underway, with commercial launch of combined Felix–Nexvia solution targeted in FY26 
There are two things that immediately jump out at me: integration risk and a failure to achieve hoped for synergies.
On the surface, it's a great fit in terms of offering a fuller product suite and monetising all aspects of the construction project workflow. Also Nexvia has an enviable LTV:CAC of >10.
I'm going to be sitting on my hands for another 12-24 months watching how this goes with interest. Felix probably needed to do something to kick start growth from a straight line into an hockey stick and this may be just the right call. It likely comes with a similar increase in risk of failure. I wish them the best of luck and will happily take a position if there are early signs of success.
https://investorhub.felix.net/announcements/7111377
Presentation here: https://investorhub.felix.net/announcements/7111375
Adding to the excellent summary from @Chagsy on this.
To recap, after the FY25 close, Felix announced they had bought Nexvia, another B2B SaaS player based in Brisbane.
However Nexvia plays on the other side of the market that Felix has been developing and monetising since before their IPO in 2021.
How did we get here?
Since IPO it had been the stated strategy for Felix to build an enterprise grade platform for large contractors (who win the work) for procurement and supply chain management of their subcontractors (who do most of the actual work).
These are generally large capital intensive, low margin, highly regulated industries so improvements in productivity are sought after and this is the real world problem that Felix solves for Large contractors, who they call Enterprises.
At FY25 there’s are 75 Enterprises paying an average of $92k ARR for $6.9m ARR.
These Enterprises once on Felix, mandate that all their vendors and suppliers used on a project get on the platform too, these “Vendors” are not monetised as Felix did not have anything significant to sell them.
There’s approximately 1,500 of these Vendors on Felix per Enterprise Client, This has been pretty stable between 1,500 and 1,700 Vendors per Enterprise client for the last 5 years. So with 113k Vendors at FY25 to monetise, the potential prize is very large – depending how many they convert and how much they pay.
Nexvia is their buy instead of build solution to monetise the Vendor side of the market place – the second part of their strategy since IPO.
A Third part of the strategy emerged since IPO when capital markets closed to businesses like Felix and they drove hard towards CF break even which they hit as predicted in FY25.
Funding Nexvia
The Nexvia acquisition represents a big buy of $12m @ 3.6x ARR, given a FLX EV of $45m (@ $SP of $0.22).
Felix are raising $16-$17m which along with $6m worth of issuance to Nexvia owners amounts to 50% of their current shares on issue. Including all options (with strikes up to 50% above current price), that’s a 74% increase in fully diluted equity on issue.
This includes a $1m capped, non-underwritten SPP @ $0.21 which closes on Tuesday 9th Sep.
A transformational deal for sure, more on this later.
Most of the Cash ($11m of $17m) raised is actually for Growth and Working Capital.
There will likely be an overhang for a while given the amount raised.
Crunchy Numbers
Prior 3 raises were all for Organic Growth Capital
They had to raise $3.8m @ $0.08 in Aug-23 when got stuck for cash.
That was nasty and mgmt. (who own 20%) would be keen to avoid a repeat of that – hence the push for FCF break even (now achieved).
This followed IPO raising $12m @ $0.36 in Jan-21, then $7m raised @ $0.32 in May-22.
What have you done for me lately?
FY25 saw FLX 22% YoY Revenue growth following 29% in FY24 & FY23.
Felix hit FCF break even in FY25 but they are still loss making even at the EBITDA level which was -$3.9m in FY25 despite improving on -$4.4m in FY24 and -$5.8m in FY23.
This represents a FY25 negative EBITDA margin of -47%!
The big question
Will this acquisition generate genuine top line synergies and unlock the Vendor Monetisation dream?
If so the stock looks very cheap today.
If not, they will likely struggle from here as they have execution risks from integration and still not close to profitability (target Nexvia is allegedly EBITDA break even).
I will look at the Bull and Bear cases from here in separate posts.
Disc: Held
Anyone else getting invites to the cap raise / SPP and you are not a current shareholder?
I sold out of FLX in 2021 (just checked the registry) and yet I am receiving all the doco as per a usual SPP invite!
Are they going so broke they are spamming everyone for a pass around of the hat?