Tuesday 19th September 2017
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ASX-listed 9 Spokes International shares rose 9.5 percent after the software developer signed a deal with Royal Bank of Canada for the North American bank to provide a white-label version of the company's platform.
The RBC contract is Auckland-based 9 Spokes' first channel partner in North America, boosting its channel addressable market to 2.75 million small and medium-sized enterprises from 2 million. RBC is one of Canada's largest banks and has more than 30 percent of the North American nation's SME market.
The New Zealand firm's channel partners pay a fee to offer the 9 Spokes platform, which SMEs can use to aggregate their cloud computing apps in one place and track financial and non-financial information against their peers in real time. The channel partners effectively take on the sales and marketing function for 9 Spokes, putting the firm's product in front of customers, and in turn developing a deeper relationship with those SMEs.
"It's a significant deal both from a numeric perspective, but also importantly it's our first foothold in the Americas market where we plan to have a significant presence," co-founder Adrian Grant told BusinessDesk. "We have a hub in the UK, we now have a hub in the North American market, and that means we can build out from that position of strength with essentially a paying customer being the Royal Bank of Canada."
The shares climbed 1 Australian cent to 11.5 cents, down from the 20 cent price in 9 Spokes initial public offering last year.
Grant said 9 Spokes pursues customers through its' own brand but also wants to build the total addressable market through banking channel partners to about 10 million. The channel partnerships let 9 Spokes enter new markets at a cash flow neutral basis at worst, he said. 9 Spokes' other channel partners are Barclays Bank and Propel by Deloitte in the UK and Suncorp Group in Australia.
The company took about seven months to close the deal with RBC and is also looking broker new relationships with several US institutions.
Grant said the company is "probably a little behind where we would have ideally liked to have been on channel partners" because negotiations with large institutions take longer to close, with the Barclays deal taking 18 months. Still, he said he was more optimistic about the next three-to-six months.
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