Both Emerge Commerce and Plurilock Security reported first quarter revenue increases, pushing back against the volatile market conditions from rising inflation and the ongoing war in the Ukraine that has buffeted many other companies. In both instances, acquisitions helped bolster the companies’ bottom lines.
Despite the good news, the stocks of both companies lingered in the range of cents, not dollars. Emerge’s sat at 30 cents, down from a 52-week high of $1.15; Plurilock’s was worth 23 cents from a 52-week high of 75 cents.
Emerge, which manages a network of e-commerce sites, lived up to its name and emerged from the first quarter of 2022 well-positioned for expansion. The company announced record revenues of $15.8 million up from $7.1 million in the same period last year. The company also reported positive adjusted EBITDA of $1.1 million compared to $270,000 for the same quarter in 2021.
Ghassan Halazon, founder and CEO of Emerge, said, “Q1 2022 marks the company’s first full quarter with the BattlBox Group and WholesalePet under Emerge ownership, and demonstrates the power and resilience of our diversified platform, even as Q1 is a seasonal quarter for some of our verticals.”
Emerge acquired BattlBox and Carnivore Club for $23.9 million in 2021, and bought Wholesalepet.com for approximately $31.2 million the same year.
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The company described the current potential for mergers and acquisitions as robust, and said that it has a number of signed letters-of-intent, including some tuck-in acquisitions.
Emerge also opined that the recent market climate of volatility could result in more attractive acquisition opportunities and pricing.
Emerge noted that it has been able to use its existing debt facility to finance its acquisitions. In late 2021, the company increased its debt facility to $25 million. The company said in its earnings report that it intends to refinance it’s current debt facility to provide additional capital for upcoming acquisitions, working capital, and improved pricing.
Emerge also filed a base shelf prospectus in January to raise up to $100 million. In its filing, the company stated the offering would provide it with “financial flexibility and efficient access to Canadian capital markets … to pursue its growth and acquisition initiatives.”
“Our M&A pipeline is currently deeper than at any point in our history, driven by entrepreneurs looking for alternatives to scale in a cost-effective manner,” said Halazon.
Like Emerge, Plurilock Security, a company focused on behavioural-biometric cybersecurity tools, saw its revenues increase because of firms it had acquired. Plurilock posted total revenues for the first quarter of $.6.9 million compared to $75,761 for the same quarter last year.
The company attributed the increase in revenues to revenue generated from Aurora Systems Consulting (ASC) and from Integra Networks Corporation (INC), both Plurilock acquisitions.
Plurilock acquired ASC, a United States-based cybersecurity solutions provider, in 2021 for $1.5 million USD in cash and shares in Plurilock. It purchased INC in March for $1.2 million and Plurilock shares.
The majority of the overall revenue came from hardware and systems sales revenue for the three months ended March 31, 2022, totalling $6.4 million. No hardware and systems sales revenue was recorded in the prior year for the same period.
“Overall, this quarter showcased our ongoing commitment to acquire profitable cybersecurity companies with top-tier customers, that can expand our operating margins and give us access to new distribution channels for cross-selling our software products as well as innovating new technology with an emphasis on zero-trust principles,” said Ian Paterson, CEO of Plurilock.
Launched in 2016 from the University of Victoria, Plurilock uses behavioural biometrics and AI to provide continuous authentication, rather than login-based authentication for logins. The security company entered into a definite asset purchase agreement to acquire certain assets of CloudCodes, a cloud-access security broker (CASB) based in India in 2021 for $1 million USD in cash and $700,000 USD in common shares of Plurilock.