ASX-listed Xero has acquired Australian invoice-financing startup Waddle in a deal worth up to A$80 million.
Waddle lets a small business take a quick secured loan against its accounts receivables - helping to tide it over until an invoice is paid.
In a market filing, Xero indicated the move could be part of a broader push into financing.
"Post the acquisition of Waddle, Xero will continue to explore how to facilitate small business access to capital beyond invoice financing," it said.
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"The acquisition positions Xero to partner with lenders globally, to better serve small business' working capital and other financial needs."
Simon Creighton (a one-time IBM solution architect) and Nathan Andrews (a former software developer for the Reserve Bank of Australia) founded Waddle in 2014 and initially positioned the company as a fintech disruptor. But after a successful deal with the Royal Bank of Scotland, it switched tack last year and began to partner with major banks across the UK and Australia during 2019. The startup closed a A$4m funding round the same year.
The Sydney-based Waddle has been a Xero ecosystem partner since 2016.
Xero says the deal will have no material impact on its 2021 ebitda.
It involves an upfront cash payment of A$31 million, plus another A$49m (for a potential total of A$80m) if product development and revenue targets are hit. Xero anticipates any earn-out payments will be in a 50/50 mix of cash and scrip.
Xero shares closed yesterday at A$98.49 - an all-time high that gives it a market cap of just over A$14 billion.
In a mid-month update, the cloud accounting company said the pandemic had slowed growth, but that it was still making net gains in subscribers in every territory.