Special Report: With strong organic revenue growth and global partnerships in place, Nexion is poised to scale up as it joins the ASX boards.
Technology company Nexion (ASX:NNG) is looking to maximise its market opportunity in global cloud computing services with its listing on the ASX this Thursday.
The company is joining the boards after closing out an over-subscribed IPO with an $8m raise, which it increased from $5m to meet demand interest from institutional investors.
Speaking with Stockhead ahead of the listing, Nexion Group CEO Paul Glass discussed how the company has filled a crucial niche in the market for cloud services, which is already a $US130bn global industry.
While big players such as Amazon Web Services (AWS) and Microsoft Azure provide the software infrastructure, getting cost-efficient access isn’t always a simple process.
“A lot of companies want to store data in the cloud. But often, they have legacy infrastructure to run their core delivery systems that’s not compatible with a public cloud,” Glass explained.
“Because you can’t physically put a server in AWS. And most importantly the size of that server — if you put it in a public cloud it would just cost you too much.”
“Our solution allows customers to access public cloud but also bring their own physical resources and put it into servers in our cloud.”
Effectively, Nexion leverages its own infrastructure as a point of entry to create a hybrid cloud services approach, with a mixture of software and hardware.
The Perth-based company saw business surge in its home market after launching in 2017, due to its clients’ relative isolation from major cloud services hubs.
And in the wake of its ASX listing, the company is building out capacity to expand to new markets globally that are in need of a hybrid cloud solution.
“That’s where the adoption of hybrid cloud is prevalent, and it’s now the fastest growing cloud industry,” Glass said.
He added that Nexion’s service adds an extra level of bespoke security, by providing a network access point which is in closer proximity to the actual clients it serves and customised customer cyber security solutions.
“So that’s the essence of where Nexion started. For example, we have a customer in WA who has 16 odd existing sites – they don’t want to pay to change their legacy infrastructure in the data centre. But they still want the security and bandwidth guarantee,” he said.
Founded just four years ago, Nexion gained traction almost immediately and has since driven triple-digit percentage gains in top line revenue growth.
With a viable business model now established, Glass said it marks the right time to access public capital markets – primarily with a view to pursue the company’s global growth strategy.
“Nexion was never set up with just the Australian market in mind. We were always set up to be global telecommunications company,” Glass said.
In that sense, a public listing gives Nexion an increased level of awareness in markets as it pursues a global partnerships strategy, he added.
“The second reason is that public funds give us the capital base to rapidly deploy out our OneCloud nodes across different regions. We’re growing rapidly but we have aspirations to scale up to a global solution on back of our agreement with Aryaka.”
Headquartered in California, Aryaka is a global SD-WAN network provider with offices in 65 countries.
In the December quarter, Nexion completed a key strategic partnership which was the “first of its kind in the world”, Glass said.
“It allows Nexion to build and operate an Aryaka point of presence,” Glass said.
“So for example, every WA company that wants to connect to offices globally now has the ability to connect via Nexion from Perth, directly to one of the Aryaka hubs around the world.”
“If you’re a CIO and you’re paying high fees for traditional MPLS circuits, all of a sudden your information doesn’t have to go via Sydney or Singapore. It goes directly from Perth to the rest of world, so in that sense it really is a great achievement.”
That combination – strong organic growth with an established global partnership – is why Nexion’s public offer was so heavily oversubscribed in such a short period of time, Glass said.
“I really think the market’s ready for this,” he said.
“If you look at the tech industry right now, in my view there’s a lot of concept stocks with applications that still need to be developed.”
“We’re not a concept stock, we’re a strong stock with recurring revenue and line of sight to continue our global expansion.”
“So when it came to marketing and understanding our hybrid model and our agreements with companies like IBM and Aryaka, that really underpinned the strength of what we were offering.”