Vonex has several platforms to help SMEs communicate with their customers and connect with the community.

• Industry-leading ONdesk software, a cloud-based program for businesses to manage all their mobile and landline calls for game changing efficiencies, scalability and customer experiences, no matter how small or large their business is.
• Reliable NBN and fibre packages.
• Affordable mobile packages with data and reliability to “keep you always on”.

The company has a target audience of over 2.37 million SMEs in Australia, with a goal to connect them simply, efficiently and affordably.

This year, Vonex has delivered strong growth on the back of its platforms, generating predominantly recurring revenue and has continued to develop, deliver and license advanced communications technologies.

The recurring revenue base the company is building is impressive.

Unfolding acquisition strategy

2020 has been punctuated by an acquisition strategy that has delivered the 2SG Wholesale telecommunications and data wholesaling business, which supplies network and communications solutions to telco retailers across Australia.

The acquisition has transformed the company and it is now looking at further acquisitions that will expand its operations.

The 2SG acquisition has been paramount in Vonex’s growth this year and has effectively changed its relationship with major suppliers.

Before the acquisition, third party wholesalers supplied either the NBN, Mobile or Landline services to Vonex.

Vonex has now flipped the switch and is able to purchase these services via 2SG.

The advantages of this include:

• Improved purchasing power, which benefits both the Vonex end customer and Company profitability
• Increase in visibility for network troubleshooting and customer support
• Speed to market with new products and services has created a competitive advantage.

Pac Partners analyst Mark Yarwood said of the transaction at the time, “The recent 2SG transaction highlights management’s appetite and ability to acquire smaller telco companies which we see as rich in opportunities.

“2SG was an asset rich purchase given its relationships with Tier-1 carriers, 100+ wholesale customers, along with direct access into NBN, offering the ability to cross-sell with the potential to build out a direct NBN presence.”

Integration of 2SG has brought a new dimension to Vonex’s business along with 150+ new wholesale customers, and has allowed Vonex to expand its offering to SME customers with new products, including fleet mobile, mobile broadband and NBN with 4G backup.

Notably, prior to acquisition 2SG had negotiated an agreement to supply business grade mobile broadband to ASX 300 company, Data#3 (ASX: DTL).

2SG’s multi-year investment in a sophisticated network environment is now also contributing to a meaningful relationship with Optus Wholesale, helping to build traffic on the Optus network by quickly deploying complex solutions for a broad base of customers.

Direct carrier relationships are valuable in facilitating better support, rates, control of customer internet and cost of supply.

There is strong customer demand for 2SG’s secure, business-grade wireless broadband, especially as demand for work-from-services dramatically increased in the face of the COVID-19 pandemic.

Strong numbers

VN8’s June quarter update featured the strongest operational and financial quarter that the company has delivered since listing on the ASX in 2018.

One of the key takeaways was the 88% increase in annualised recurring revenue during fiscal 2020: this now stands at $16.4 million.

Vonex finished the first half of the year with $3.7m in total contract value (TCV) of new customer sales — 65 per cent up year on year. It has shrunk its net loss from $2.79 million last year to $596,000 in FY20, ending June 30.

Revenue grew 67 per cent, from $9.2 million to $15.4 million, while underlying earnings before tax returned to the black, to $25,237 from $454,332 in the red in FY19, and $4.8 million cash at bank. Annualised recurring revenue grew 89 per cent to $16.4 million.

In a letter to shareholders, Vonex non-executive chairman Nicholas Ong said its achievements during the year were incredible considering the challenges faced by many businesses in the wake of COVID-19, particularly highlighting its June quarter as its “best quarter since becoming a listed company”.

“We have continued to accelerate our growth and generate revenue that is largely recurring, which provides a strong foundation to build on in the years ahead,” Ong said. “As we commence FY21, we are excited to build on our strongest quarter to date, and I’m confident the strategies and targets we have in place will drive Vonex to hit new milestones as we continue to execute on a range of growth initiatives.”

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