UCaaS Investment: NEC Backs Rescheduled Intermedia IPO

NEC plans to invest $40 million in Intermedia amid a rescheduled Intermedia IPO (initial public offering). The anticipated investment is part of NEC’s expanded global partnership with Intermedia, which focuses on Unified Communications as a Service (UCaaS) and Contact Center as a Service (CCaaS).

Intermedia (proposed stock symbol: $INTM) had planned to launch an IPO in April 2021. But the IPO was delayed amid choppiness on Wall Street, Intermedia said at the time. Still, ChannelE2E believes the delay actually involved lukewarm investor interest in the UCaaS company.

Fast forward to September 2021, and Intermedia revived the IPO plan — this time seeking to raise $100 million, which is down from an earlier $300 million target, Renaissance Capital noted.

Intermedia Business Evolution: From Email Security and Data Protection to UCaaS

During its early years, Intermedia was mainly known as a hosted Exchange service provider. But as Microsoft Office 365 and various cloud storage companies gained momentum, Intermedia pivoted into the UCaaS market.

Intermedia’s business and financial metrics, according to an October 2021 SEC filing, highlight the business and revenue mix evolution. Among the metrics to note:

  • Revenue of $251.6 million for the year ended December 31, 2020, and $133.8 million in the six months ended June 30, 2021.
  • Growing – UCaaS Solutions grew annual recurring revenue (ARR) 31.5% over the 12-month period ended June 30, 2021, and contributed 35.4% and 39.4% of our total ARR as of December 31, 2020 and June 30, 2021, respectively.
  • Shrinking – ARR from the BCA product group, which includes cloud-based email solutions, email protection, archiving and encryption services, file backup and collaboration solutions, productivity services and other services including SIP trunking, declined 5.7% over the 12-month period ended June 30, 2021, and contributed 65% and 61% of our total ARR as of December 31, 2020 and June 30, 2021, respectively.
  • Net loss for the ended December 31, 2020, was $21.7 million. Also, net loss for the six months ended June 30, 2021, was $13.7 million.
  • Channel Partnerships span more than 7,000 companies.

NEC Installed Base: A Big Intermedia Opportunity?

Meanwhile, NEC has vowed to partner with Intermedia through at least April 2030. The commitment is five years longer than the original NEC-Intermedia relationship plan. Moreover, the expanded agreement makes NEC the exclusive reseller of Intermedia UCaaS and CCaaS solutions in Japan.

According to Intermedia’s SEC filing from October 2021,  NEC and its partner network can target an estimated installed base of approximately 80 million on-premise NEC business phone users.

In a prepared statement about the relationship, Ram Menghani, president of NEC Enterprise Communication Technology, said:

“The extension of this critical, strategic partnership and our long-term commitment to Intermedia’s future reflect the success achieved by the two companies together thus far. It also signifies the confidence we have in Intermedia’s innovative and focused approach for developing and delivering the cloud solutions that businesses want, and partners want to sell. Intermedia has proven to be the excellent partner we thought they would be. From their highly talented and inventive engineering and product development teams that have produced the UNIVERGE BLUE suite of products that now includes CONNECT BRIDGE, to their powerful partner platform that enables resellers to brand Intermedia’s products as their own, to their comprehensive sales, marketing, and technical support that are unmatched in the market.”

UCaaS Mergers, Acquisitions and Private Equity Investments

Meanwhile, M&A activity and investments in the UCaaS market remain steady. Among the recent moves to note: RingCentral acquired certain technologies from Mitel, and the two companies inked a UCaaS partnership. See more UCaaS M&A and investment deals listed here.

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