Here's why the Bigtincan (ASX:BTH) share price is dropping lower

Here's why the Bigtincan Holdings Ltd (ASX:BTH) share price is on the move on Wednesday…

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The Bigtincan Holdings Ltd (ASX: BTH) share price is on the move on Wednesday following the release of an announcement.

In early trade the sales enablement automation platform provider's shares are down 1.5% to $1.09.

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Image source: Getty Images

What did Bigtincan announce?

This morning Bigtincan announced that it has entered into a binding agreement to acquire unified sales enablement platform provider, ClearSlide.

According to the release, the company has agreed a purchase price of US$16.25 million (A$22.6 million) in cash with ClearSlide's sole shareholder, Corel Inc.

This purchase price represents ~3.1x ClearSlide's estimated calendar year 2021 sustainable annualised recurring revenue (ARR) of ~US$5.2 million.

Why ClearSide?

ClearSlide is a leading sales engagement company whose offerings help full cycle sales and service teams that want to smooth the friction between their buyers and sellers.

Management notes that it brings significant new technology that complements Bigtincan's existing technology and supports Bigtincan's long-term strategy to lead in optimising buyer seller engagements. It also brings hundreds of customers to Bigtincan, including NBC Universal, The Economist, Aflac, web.com, and Comcast Spotlight.

It advised that these customers use ClearSlide's technology to connect with their customers using the built in remote connectivity platform and advanced engagement tools including sales campaign management. They also use its sophisticated analytics to better understand and connect with their customers.

Bigtincan's Co-Founder and CEO, David Keane, commented: "As part of meeting our mission and vision of empowering every customer facing worker to be successful in the new digital and remote economy adding ClearSlide sales engagement technology and the customer base brings new opportunities for Bigtincan to extend our market space and continue our leadership position."

Bigtincan also quoted Jim Lundy in its release. He is the founder and CEO of technology research firm, Aragon Research.

Mr Lundy said: "The Sales Enablement market continues to grow, and with market growth comes consolidation. The Bigtincan acquisition of ClearSlide brings together two market leaders in Sales Enablement that combined will make Bigtincan one of the largest providers in the market."

Institutional Placement.

In order to fund the deal, the company launched and successfully completed a $35 million institutional placement.

These funds were raised at an issue price of $1.05 per new share, which represents a 5.8% discount to its last close price.

Management advised that the placement was well supported by new and existing institutional investors.

FY 2021 guidance.

In addition to the acquisition, management revealed that the company remains on track to achieve its guidance in FY 2021.

It continues to forecast ARR of $49 million to $53 million, revenue of $41 million to $44 million, and stable retention. It also revealed that both organic growth and acquisition-related growth is on track.

This compares to Bigtincan's FY 2020 ARR of $35.8 million.

James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of and recommends BIGTINCAN FPO. The Motley Fool Australia has recommended BIGTINCAN FPO. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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