Xurpas' Star Dims, Sells Stake in Yondu For Almost Half Its Original Price
Xurpas Inc. was once touted as a rising star in the local tech scene, having been the first Filipino tech company to go public in 2014. But the company seems to be going through a rough patch in recent years.
On Wednesday, Xurpas reportedly sold 51 percent of its shares in Yondu Inc., a software developer, back to Globe Telecom for P501 million in cash. Xurpas previously purchased half of Yondu from the Ayala-owned telecoms company in 2015 for P900 million. This means Yondu's current selling price is almost half of the original amount Xurpas shelled out to invest in Yondu.
Globe previously owned 100 percent of Yondu back in 2015 before it sold 51 percent to Xurpas. At only 44 percent of its original selling price, the new purchase will make Globe the sole owner of the tech company once more.
According to Xurpas’ response to the Philippine Stock Exchange’s (PSE) query on the sale, the proceeds will be used “to retire existing debt obligations” and for working capital.
Yondu is a leading content developer and provider of mobile value-added and IT services and was, before its acquisition, considered Xurpas’ only real and large-scale competitor. However its performance in 2018 wasn’t enough to keep the company in Xurpas’ corporate portfolio.
Xurpas, a brief history
In early 2014, Xurpas was publicly listed in the PSE with an estimated market capitalization of P6.8 billion. Its IPO price was listed at P3.97 per share in December 2014. Less than a year after its listing, Xurpas acquired Yondu from Globe, its then-sole owner, for P900 million. Shortly after the Yondu purchase, the first half of 2016 would see a boost in Xurpas’ stock performance as its market value reached a high of P27 billion in March that year.
In less than a year after listing, Xurpas bought nine mostly foreign companies in what can only be described as an acquisition spree. Apart from Yondu, those companies include Singapore-based Altitude Games, which eventually led to the development of Xurpas's subsidiary Xeleb Technologies Inc; Hong Kong-based Human Resources (HR) technology firm Micro Benefits Ltd.; HR solutions provider Storm Flex Systems, and Quick.ly, a Pasadena, California-based company that, at the time, was developing a mobile search platform, among others.
According to a profile on co-founder Nix Nolledo in Forbes Philippines, what started out as a company that sold simple content like horoscopes and jokes to mobile phone users eventually had in its roster over 200 products, including more sophisticated games, search, data commerce, and even human resources platforms.
From 2012 to 2014, the company posted an average annual increase of 61.2 percent in revenue. In the first nine months of 2015, amid the frenzy of acquisitions, revenue rose at a higher clip of 84.2 percent to P508.6 million from the same period the year before, the Forbes report said.
However, the last three years have not been kind to the tech company. From P3.97 per share at launch, Xurpas shares are currently trading at 1.05. The company as a whole is now valued at only P1.965 billion.
Despite posting P2.1 billion in revenues in 2017, the company only earned a net profit of P103 million. Similarly, in 2018, the company experienced a net loss of P812 million in 2018 despite posting P1.24 billion in revenues. Xurpas is also P115 million in the red in the first half of 2019. The company attributes its losses this year to lower revenues and losses in subsidiaries, which they hope to remedy by selling Yondu to Globe.
“Our divestiture of Yondu will provide the company additional liquidity, retires debt, and allows us to focus on high-value, emerging, innovative, and disruptive technologies and platforms impacting both enterprise and consumer commerce," Xurpas President Alexander Corpuz said.
However, Yondu contributed 85 percent of the company’s revenues in the first half of 2019. Xurpas expects its net income performance will worsen by 26 percent, but they also expect that its remaining businesses will eventually make up for the loss.
Subsidiary Xeleb dissolved
Yondu’s sale comes with the news that Xurpas will also dissolve celebrity gaming platform Xeleb Technologies, Inc. and Xeleb Inc. According to a public disclosure on PSE, the two subsidiaries have made no significant contribution to Xurpas, thus resulting in the board’s approval to dissolve the entities.
Xeleb gained popularity in 2015 and 2016 for featuring a number of celebrities on their gaming platform. Many celebrities, like Anne Curtis, Erwan Heusaff, Isabella Daza, and Kim Atienza were reported to be shareholders of the company.
After unloading Yondu and dissolving Xeleb Tech and Xeleb Inc., Xurpas will now be left with only two subsidiaries in its portfolio: Storm Technologies Inc. and Seer Technologies Inc. Xurpas has previously stated that this move, as well as its corporate restructuring, will allow it to focus on its existing business.