“It is very small company which builds the software services and helps CRO,” he said. “Since 8K Miles focus on a pharma and life savings industry this addition will help us to reach out to more CROs in the pharma market with a solution.”
Below is the transcript of the interview on CNBC-TV18.
Q: Could you give us a few details with regards to this acquisition? I know it is a small ticket acquisition but the acquired company is Mindprint Inc., Canada could you give us the few details with regards to what is the revenue? What is the current margin what is the profitable deal from this company?
A: Mindprint is a clinical research organization (CRO) operations and analytics company. It is a start up actually, it is very small company which builds the software services and helps CRO. Their revenue is under half a million dollar right now but it has a huge growth potential. Since 8K Miles focuses on pharma and life savings industry, this addition will help us to reach out to more CROs in the pharma market with a solution.
We see a great synergy in terms of 8K Miles being cloud leader we could able to go to the CRO’s where we can help them to move into the cloud or service strategy and also take the CRO’s SAS analytics product into our pharma industry.
It is basically a kind of a technical acquisition I would say more of intellectual property what they have build and a strong domain expertise in CRO which would help us to grow the business.
Q: Could you tell us when exactly you expect these synergies to come about and also isn’t this a new geography? What is the logic behind that?
A: Even though Mindprint is based in Canada it is focusing on US market primarily. Their main customers are all from the US market it has not many customers from Canada. It is going to enhance both US and Canadian market for us and 8K Miles also operates in Canada right now. Probably we have subsidiary in Canada too so it really helps us to expand the market share.
The idea is actually, this solution integrates with our cloud offerings for the pharma industry. In fact we are going to launch our solutions very shortly and it has fit into that and it can help customers to really embrace the cloud and also improve the operational efficiencies.
The idea is: this solution integrates with our cloud offerings for the pharma industry. In fact we are going to launch our solutions very shortly and it has fit into that and it can help customers to really embrace the cloud and also improve the operational efficiencies.
Q: If I got that number right, I believe that you said that the revenue from this newly acquired company is around half a million dollars?
A: It is less than half a million dollar currently.
Q: You are looking to scale it up to?
A: We look at to integrate this business directly in to 8K Miles itself. We want to enhance our pharma and life saving revenues with this CRO. This company is not specifically is acquired for revenue addition it is more in terms of technology addition into our services where we can able to up sell to huge numbers of customers or existing customers.
Q: What about the profitability? Will this acquisition be earnings per share (EPS) accretive and from when will it be EPS accretive?
A: This company is barely a breakeven company but with its addition immediately into our business we would be able to go into our existing customers and offer them solution. It is not going to impact any of our profitability; it will only improve our profitability.
Q: You are saying it is just a breakeven then it won’t be EPS accretive from the first year itself?
A: You may not see a growth in the first quarter but subsequent quarter you will see a contribution into that bottomline.
Q: Is this acquisition the start of many more acquisitions? What is the cash on your books? How do you intend and what is your strategy going ahead?
A: We are focusing on more acquisitions coming around. Few months back we did a warrant for about Rs 65 crore so we are also funding through internal accruals. We are focusing in couple of more acquisitions in the next quarter or couple of quarters.
Q: You will be looking to acquire these companies that you already have on your radar via internal accruals or will you raise fresh capital? What is the cash on your books?
A: We do not intend to raise any fresh capital at this moment we have already and offering and we have our internal cash generation. We are looking to expand our business more in the pharma, life science and also in the kind of user navigation data analytics area. So our radar is looking at this kind of companies.
The CRO company is even a small start up it as a very good solution and which could able to impact with our customers into more like a recurring revenue model because SAS model is scale. This company is a small but it has a SAS model which is an annuity revenue model completely so it will help. With our future acquisitions this will be a primarily catalyst to improve our business.
8K Miles Soft stock price
On March 09, 2015, at 15:01 hrs 8K Miles Software Services was quoting at Rs 724.00, up Rs 4.00, or 0.56 percent. The 52-week high of the share was Rs 923.00 and the 52-week low was Rs 106.00.
The company’s trailing 12-month (TTM) EPS was at Rs 0.57 per share as per the quarter ended December 2014. The stock’s price-to-earnings (P/E) ratio was 1270.18. The latest book value of the company is Rs 21.75 per share. At current value, the price-to-book value of the company is 33.29.