Inabox acquires cloud services company Hostworks for AU$7m

Inabox has acquired Hostworks to extend its cloud offering, gain new long-standing customers, and strengthen its position in the South Australian market.

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Damian Kay, CEO at Inabox Group

Image: Vincenzo Amato

Wholesale telecommunications and cloud services provider Inabox has announced it has acquired 100 percent of the shares of Hostworks and its associated companies from BAI communications for AU$7 million. Under the terms of the deal, AU$5 million is to be paid upfront, with the remaining AU$2 million to be paid in FY18 over an 18-month period.

Founded in 1999, Sydney-based Hostworks provides managed hosting and operations in public and hybrid clouds, digital consulting, application development, and platform-as-a-service for live and on-demand media.

Inabox said the acquisition of Hostworks will allow it to extend its own cloud-based offering and strengthen its position in the South Australian market given the acquired company also operates a 24/7 network operations centre in Adelaide.

Damian Kay, CEO of Inabox, said the acquisition would give his company the ability to manage enterprise-scale transfers of information to the cloud.

"More and more of the companies we work with are moving towards the cloud to reduce capital expenditure on infrastructure and take advantage of the convenience of cloud services, such as increased scalability and reduced maintenance costs," Kay said.

"We don't just want to cater for this trend -- we want to be the best at it. That's why we bought Hostworks."

In FY16, Hostworks reported AU$22 million in revenue, 90 percent of which was recurring revenue generated from its hosting services.

The addition of Hostworks to Inabox's portfolio is expected to bring the combined group's total headcount to about 300 and total revenue to AU$119 million in the first year.

Inabox will also gain more than 60 blue-chip clients, including Holden, Jetstar, Rydges Hotels, and Foxtel.

Moving forward, the companies will have the opportunity to cross-sell each other's products and services to their customer bases, Inabox said, though Hostworks will operate as a standalone business.

Inabox has made a number of acquisitions in the last three years, including Anittel, Neural Networks Data Services, and CloudXchange. However, in FY15, Inabox attributed its financial losses to the acquisitions.

In June last year, Inabox sold its Hosted Collaboration Solutions business to Telstra for AU$4.5 million, which it had acquired from Anittel.

A couple of months later in August, Inabox unveiled its wholesale channel mobile product utilising Telstra's 4G and 3G networks, providing coverage for 98.9 percent of the Australian population.