RXP who? Meet the low profile ASX company that bought ad agency The Works
Most in the industry would not have heard of ASX-listed technology company RXP until it snapped up creative agency The Works this week for a rumoured $25m earlier this week. But RXP is growing fast and is now on the media and marketing map, as Mumbrella's Adam Thorn explains.
If we’re honest, RXP was relatively unknown in the media and marketing industry until it snapped up The Works for an as yet undisclosed fee.
But RXP is one to keep an eye on: the business has gobbled up 15 other companies since 2011 and has been posting stunning growth figures in recent years.
After a series of acquisitions based in the tech space and a turnover of $127m, the purchase of The Works shows RXP has wider ambitions as a holding group.
Here, Mumbrella answers the major questions.
Who are RXP and what do they do?
RXP is an ASX-listed ‘technology consulting company’ headquartered in Melbourne. Founded in 2010, the bulk of its work is focused on user experience for clients’ customers. For instance, it was commissioned to turn a NSW government statistics PDF into a more intuitive and interactive website and overhauled the software phone operators at the Royal Automobile Club of Tasmania use when dealing with policy holders.
How big are they?
The answer is big and getting bigger – quickly. The company currently employs 780 people – but that’s up from 420 in 2014. RXP’s latest figures show its revenue at $127m, but, again, that’s up from $55m in 2014. Current profits, meanwhile, stand at $10.7m.
The company has a market capitalisation on the ASX of $125m. By contrast, Enero Group – parent company of the likes of BMF, Naked and Frank PR – has a market cap of little more than half that at $85m.
How has it grown so quickly?
Acquisitions. The company has taken control of 16 different businesses, including The Works, in its history, and in the last couple of years has purchased project management company Engage ViidaCom and fellow digital design consultancy 10collective.
RXP’s latest annual report reveals it has a $25m debt facility with Westpac earmarked for its ‘growth by acquisition strategy’. So far, $16m has been drawn down. The purchase of The Works was likely financed through this loan, as well as existing cash reserves and other raised capital. More financial details were set to be released later today.
What’s in it for RXP?
CEO Ross Fielding said the buyout aimed to increase its digital services offering, diversify its customer base and bump up its presence in NSW. And as RXP’s press release hinted, Australia’s digital economy is valued at more than $70bn, so RXP want a bigger slice of the pie. The business now has offices in Sydney, Melbourne, Canberra, Hobart and Hong Kong. Being associated with The Works well-received Optus campaign with Usain Bolt probably didn’t hurt, either.
Will The Works staff now be tasked with helping RXP’s clients?
We’ll have to wait and see, but the key quote in the press release was that RXP could now offer its current clients a “deeper level of engagement” as well as representing “higher value work and significant cross-sell revenue opportunities”. One of its previous acquisitions, 10collective, continues to operate as its own separate entity, and with its own office, though now has “part of the RXP Group” under its logo. Expect to see a similar arrangement, at least in the short-term, at The Works. RXP will now have access to the kind of creatives and brand specialists it has previously lacked.
Who’s at the top of RXP?
John Pittard is the chairman and non-executive director and justifies his $800,000 a year remuneration by his 30 years’ experience working with clients as diverse as News Corp, Telstra and Shell Australia. He’s joined on the senior team by CEO Ross Fielding, who, like Pittard, worked for Telstra, and was responsible for innovation. Sandra Hook, one of two non-executive directors, has a similarly starry background, having plied her trade for Foxtel, Fairfax and ACP. For a time, Hook was in charge of News Corp’s magazine arm.
Kenneth Stout, the other non-exec director, specialises in accounting and finance and was a partner at Ernst & Young.
So exactly who else have RXP bought?
The current list of companies now under the RXP umbrella include:
- Indigo Pacific
- Vanguard Integration International
- Stonewall Consulting Services
- PL Consulting
- NSI Technology
- Zenith Solutions
- Transpire
- Method Group Consulting
- Integrated Value
- Nobel Consulting
- Insight
- Aptus
- Centrum Systems
- Engage ViidaCom
- 10 collective
- The Works
so many acquisitions of small agencies.. all funded by debt.. looks like another Enero in the making!
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Based on the quality of design and ux applied to the NSW Government Statistics website The Works are much needed.
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