LONDON: Netcall plc (AIM: NET), a leading provider of intelligent automation and customer engagement software, has acquired Govtech Holdings Limited, a digital process automation company.

Headquartered in Cirencester, Gloucestershire, Govtech serves around 50 local authorities including Leeds City Council, The City of Edinburgh Council and Bristol City Council.

All 39 employees, including the founders, will remain with Netcall and continue to be based in Cirencester. 

For the financial year ended 31 March 2024, Govtech reported a 17% increase in revenue to £3.5 million (2023: £3.0 million), adjusted EBITDA of £0.79m (2023: £0.65m), and a profit before tax of £0.73 million (2023: £0.59 million).

Gross assets as of 31 March 2024 were £3.1 million (2023: £2.6 million). Annual recurring revenue from cloud subscriptions grew by 13% to £3.4 million (2023: £3.0 million).

At the time of completion, Govtech expects to have approximately £1.5 million in cash. All figures are unaudited.

The acquisition of Govtech is expected to be immediately earnings enhancing for Netcall. It significantly strengthens the Group’s market share in the local government sector, increasing the Group’s customer base from 26% to 34% of UK councils.

Additionally, it provides an entry into councils’ revenues and benefits function, complementing Netcall’s existing applications across housing and social care processes for local government.

Govtech’s solutions will be integrated into Netcall’s Liberty platform, alongside its existing automation capabilities, such as AI-enhanced citizen experience technology, chatbots, robotic process automation, and rapid application development.

This integration will create substantial new opportunities for cross-selling within the expanded portfolio, thereby increasing the stickiness of the Liberty platform across various council functions.

The total consideration for the acquisition is up to £13.0 million. The initial consideration is £9.6 million, payable in cash from Netcall’s existing cash resources. Of this, £9.15 million is payable on completion, while £0.45 million is held back and deferred for 12 months.

James Ormondroyd, Chief Executive of Netcall, commented: “The acquisition of Govtech significantly expands our presence in the local government sector, strengthening our product proposition and providing substantial new cross selling opportunities, while adding to our growing base of recurring revenues. We look forward to welcoming the Govtech team to Netcall and are confident in the Group’s continued success.”