Take-away giant McDonald's has bought into Kiwi tech company Plexure. Photo/Getty Images.
Take-away giant McDonald's has bought into Kiwi tech company Plexure. Photo/Getty Images.
Fast-food multi-national McDonald's is spending $5.4 million on a 9.9 per cent stake in NZX-listed tech firm Plexure.
McDonald's says this is its first-ever investment in a mobile app vendor and follows its recent announcement that it is buying Dynamic Yield, a decision-engine and personalisation company based in Israel and New York.
McDonald's says its investment in Plexure will provide it with enhanced access to Plexure's technology in the quick-service restaurant space, including access to greater back-end and front-end features, customer functionality and customer targeting.
"Across all markets, we're using technology to elevate and transform the McDonald's customer experience," says group president and chief executive Steve Easterbrook.
"Our mobile apps play a key role in our digital acceleration, allowing customers to interact with us on their terms in a personal, customised way," Easterbrook says in a statement.
"This investment is a testament to our belief in Plexure's ability to deliver strong results for our business as well as the talent and technology they've cultivated."
Plexure designs and builds software allowing other businesses, mainly retailers and fast food outlets, to target customers via their mobile phones.
Plexure chief executive Craig Herbison says the funds from the placement of 13.8 million shares to McDonald's will be used to expand his company.
The shares have been issued at 39.05 cents per share compared with Plexure's closing price yesterday at 31 cents, when its market capitalisation was $38.9 million.
The shares lifted to 41 cents in early morning trading.
Plexure listed on NZX in 2012 as Vmob via a backdoor listing that included issuing shares at 2.5 cents each. It changed its name to Plexure in 2016.
Plexure's success has caught the attention of a global giant. Photo/Supplied.
"This is a tremendous vote of confidence from our largest customer. This investment will further our efforts to reach more people with our technology, provide world-class service to our clients and execute our growth plans for our company," Herbison says.
Herbison described the deal as one of "limited exclusivity", explaining that there is a list of brands that Plexure will no longer work with.
"Understandably, they will be their direct competitors, like Yum Foods, Restaurant brands and Burger King," Herbison tells the Herald.
"Outside of that, we still have full ability to sell our technology to other food brands, including those in the fast-casual space."
He says Plexure has also had to "stop deal flow with a few prospects" keen to work with Plexure.
While he wouldn't mention any names of these companies, he confirmed that they were in the quick-serve restaurant category.
"It's a compliment in a way in that they see our tech as so good that they don't want anyone else working with it," says Herbison when commenting on the halo effect of a global giant taking notice of Kiwi player.
Herbison adds the company is also eyeing a number of other categories as it looks to expand the business in the coming years.
"We're in fuel and convenience with Seven-Eleven, we're in big box retail with Ikea, we're looking at global grocers and global hotel chains. We're really looking for businesses who want that global scale."
Last month, Plexure said it expected revenue for the year ended March is likely to exceed $16.8 million, up more than 40 per cent on the previous year. However rising costs mean annual profit is likely to be about $1 million, little changed from the first half, excluding the impact of a maturing convertible note issue.
Plexure boss Craig Herbison. Photo/Supplied.
The first-half net profit of $1.1 million was Plexure's maiden profit.
The conversion date for the notes was March 29 and most converted to equity because Plexure's shares were trading well above the conversion or cash price of 12 cents. That will drag reported net profit down by more than $1.6 million, although there will be no cash impact.
Herbison said Plexure had a cash balance of around $6 million, which will now be inflated by the $5 million injection from McDonald's.
"This is a good pool of cash for us to look at growth," Herbison says. "We're looking at potential acquisitions to further enhance our proposition because the technology never stands still and neither does the opportunity of what it can deliver."
Herbison pinpoints smart speakers and chatbots as some of the potential areas that Plexure could move into in the near future.
Herbison expects the business to continue growing in the current year. The company currently employs 76 staff but is currently recruiting for an additional 18 roles.
Although Plexure services companies across 49 countries, Herbison says the company doesn't have plans to move abroad.
"We have a lot of talent in New Zealand because we have a very open immigration policy," Herbison says.
"We are a big benefactor of that, with something like 23 different nationalities at our business... We have been really lucky that we have had access to that talent here in New Zealand and long may it continue."
