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Nexion finishes its first year at a gallop, with IBM partnership underpinning its path towards being a global player

Nexion’s share price has risen by 22% over the past month, as the company forges a strategic partnership with IBM that underpins its international expansion.

Hybrid cloud provider Nexion Group (ASX:NNG) has just completed a year in which it took great strides toward achieving its goal of becoming a global hybrid cloud operator of choice.

During the year, the company expanded its client base to include customers in New Zealand, Canada, South Africa, and Dubai, as well as adding a Tier 1 GTS (Global Technology Services) partnership globally with IBM.

And in just the last two months (first two months of FY22), the company won new business contracts with a total value of $5.1m, a 50% increase from its total contract value at the end of FY21.

This includes new multimillion-dollar service contracts with IBM Australia, which added more services to the mix of products already consumed at present.

The 60-month contract recently signed with IBM extended on current IBM solutions in the Nexion W1 Data Centre, and was the fourth significant contract Nexion has signed with IBM in the last 12 months.

The $5.1m in new business wins now takes Nexion’s total contract value of work on-hand from $10.2m at the end of FY21, to more than $15m.

Investors have also been hot on the trail, pushing NNG’s share price higher by 22% over the past month.

Highlights for the year

COVID-19 hit in mid 2020, just when Nexion was gathering momentum toward its IPO.

For the full year of FY21, Nexion’s revenue was down 43% to $2.18m, with drop in revenue in Q1 and Q2 FY21.

The drop in revenue was only on their Project or ‘once off revenue’ line, but Annualised Recuring Revenue continued to increase month on month, underpinning long term growth and sustainability of the company.

Global enterprise consume ICT as a service and spend on hardware or once off solutions have been replaced with term contracts. Nexion is leading the market in embracing this trend and the business as a whole is built around this consumption trend.

As a result, the first half was soft for many tech providers as new projects were put on hold.

Despite the numbers, Nexion is building on a long-term foundation and TCV (total contract revenue) and has achieved significant milestones since listing on the ASX in February.

TCV announced in Quarterly Activities report for period ending June 2021 was up from $6.1M to $10.2M and has been further extended in the recent announcement.

The second half saw business gather pace toward pre-COVID growth rates, and although product supply and resource availability remained a challenge, Nexion began to accelerate its pipelines.

The focus for the year was on investing and building strategic relationships with its core customers and suppliers.

These efforts have paid off as the company was able to develop revenue streams across a range of Hybrid Cloud and SD-WAN network services, as well as winning new business across a diverse range of verticals.

At home, Nexion made headways during the year toward its local expansion strategy, announcing the acquisition of Blue Sky Telecom, a Perth-based telecommunications and network solution provider.

The acquisition combined both companies’ products and infrastructure, to create a synergised, full-service communications company to service the WA market.

Internationally, Nexion  enjoys an exceptional relationship with IBM and key technology partner, Aryaka.

The agreement with SD-WAN provider Aryaka in November 2020 paved the way for Nexion to offer points of presence (PoP) and nodes in locations not only between Perth and Auckland, but potentially in new regions.

This was followed up with an extension agreement to include satellite nodes linked to the Perth and Sydney Aryaka PoPs.

And in early August, the two companies commenced negotiations for Nexion to take the helm of Aryaka Australia and New Zealand, to represent and grow the Aryaka channel and enterprise business in the region.

That deal is expected to provide Nexion with more direct sales, marketing, technical and global channel resources to drive the solution growth within the ANZ region.

Nexion also made progress towards becoming an international player when it launched its hybrid cloud solutions with IBM Global Technology Services (IBM GTS) in New Zealand in mid-July.

The combination of Nexion’s local Hybrid Cloud Services and IBM’s Multi Cloud Management Services will provide the market with a unique combination of end-to-end managed services.

It’s clear from that deal that Nexion is focused on creating a global market for hybrid cloud and SD-WAN, instead of simply slotting into an existing one.

The company is also fast becoming a contender in the enterprise IT Managed Services market, underpinned by its partnership with IBM.

The partnership has helped Nexion to establish a strong foothold with enterprise customers who have selected Nexion to provide fully-managed tech services including networks, help-desk, storage, cloud, security, and wireless communications.

This foothold has in turn allowed Nexion to leverage the services it provides to other core industry verticals including Utilities, Oil & Gas and Resources.

As part of the deal with IBM, Nexion delivered a large intercontinental data link from Perth to Calgary in Canada to support one of IBM’s Perth-based customers.

“Nexion is becoming a serious contender in Enterprise Managed ICT and Cloud services with additional services consumed by IBM and Clough,” commented Nexion CEO, Paul Glass.

“Global SD-WAN and globally connected Hybrid Cloud is one of the fastest growing segments of the information technology industry today, and Nexion is proud to be a serious contender with our global cloud, security, networking, and data centre product-set.”

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