When bushfires ripped through communities over summer, the New South Wales Rural Fire Service smartphone app, Fires Near Me, became a crucial warning system for many holidaymakers and residents.
It quickly became of Australia’s most downloaded apps, with more than two million users – and around 1.6 million downloads in the two months leading up to Christmas.
Despite its massive popularity, Fires Near Me is up for sale as its developer, struggling ASX-listed tech company Arq Group (previously Melbourne IT Group), looks to offload parts of its business as part of a major restructure to improve its plummeting profitability. Arq Group (ASX: ARQ) has seen its share price fall from above $3.50 when it rebranded in May 2018 to just 0.35 cents, falling another 4% today.
The business announced a strategic review by Macquarie Capital last September following a massive slump in revenues during the second half of 2019 and the departure of its long-term CEO, putting its SMB and Enterprise Services (ES) divisions up for sale.
In an update to the market on Christmas eve, Arq said the Strategic Review was ongoing, and the business had received a number of indicative, non-binding bids to acquire the SMB and ES ventures.
The ES division is forecast to post an underlying EBITDA loss of $1-2 million for 2019, a far cry from the forecast $12-14.5 million profit at the start of the year. The SMB division’s underlying EBITDA was forecast at $9.7-10.7 million for 2019 on revenue of between $65m and $70m and group underlying EBITDA is expected to be in the range of $13.8m to $15.8m, down from the $22-25.5 million forecast last June.
The business has been in discussions with its lenders, ANZ and NAB, regarding the breach of the net leverage ratio under its loan facilities in September 2019 and December 2019 quarters. The lenders have agreed to provide $2.5 million of additional funding to the company for short-term working capital requirements.
Arq Group interim CEO Tristan Sternson said due diligence by the parties involved in the potential sales continued.
“Both the SMB and Enterprise Divisions are strategic businesses in growth markets,” he said.
“It continues to be business as usual for Arq Group.”
The South Australian version of Fires Near Me will also be part of the sale.
As nearly 200 fires raged across NSW over the Christmas holidays break, destroying more than 1000 homes, a team of around 55 worked 24/7 to keep the app updated with the latest fire information, warning people when to watch and act or evacuate.
No doubt one thing users of the NSW Fires Near Me app and Victoria’s similar VicEmergency app will hope for is a more coordinated approach for people on the border between the two states, with details currently stopping at the border, forcing people to flip between the two apps. Based on user comments