After going public this year, The Glimpse Group (Nasdaq: VRAR) is adding immersive technology to its capabilities with the acquisition of a local company.
Continuing its growth through M&A deals, the New York-based diversified augmented and virtual reality firm has plans to acquire Fort Worth immersive digital content company Sector 5 Digital (S5D) in a deal valued at $27 million, with the aim of driving future revenue growth.
“We were growing very fast, taking on a lot of new enterprise clients. And, quite frankly, our limiting factor in growth was being able to add new development resources,” said Jeff Meisner, co-founder and CEO of S5D. “Being part of glimpse adds 70-plus new developers, programmers and artists that we just didn't have access to before. I can already see how we can utilize that to better service, our existing customer bases, as well as future projects.”
As part of the deal, Meisner will stay on as S5D general manager, Glimpse chief revenue officer and a non-independent board director. The deal is expected to close in the first quarter of next year, and S5D will receive $8 million upfront, split evenly between cash and common shares. The additional $19 million is dependent on S5D hitting certain revenue milestones.
According to the company’s unaudited figures, S5D is expecting to hit $4 million in revenue this year, up from the $3 million generated in 2020. As a combined company, that would nearly double Glimpse’s current annual revenue, bringing its potential annual revenue run rate to about $10 million.
Following the acquisition, Glimpse expects to have approximately $20 million in cash on its balance sheet.
“One of our focus areas is building scale where scale doesn't exist in this industry,” said Lyron Bentovim, Glimpse’s president and CEO. “Opening up a lot of S5D’s relationships to Glimpse companies, opening up Glimpse’s relationships to S5D’s capabilities, and really sharing technology gives us a real one-plus-one-equals-three kind of solution.”
Meisner said S5D will continue to operate out of Fort Worth, where it has about 25 employees, giving Glimpse access to the North Texas region’s client base and talent pool. Bootstrapped since 2014, S5D has created immersive content and experiences for companies in a variety of industries, including American Airlines, Galderma and Haliburton. Combined with S5D’s workforce, Glimpse has close to 100 members on its team.
The deal marks Glimpse’s twelfth acquisition since forming in 2016, with Bentovim hinting at more down the road. Meisner said the move will enhance S5D’s capabilities, allowing it to tap into the talent and technology of other Glimpse subsidiaries. This year, Glimpse acquired Boston-based XR Terra and Augmented Reality Investments Pty. Ltd., the latter of which allowed it to expand to Australia.
“We own and operate multiple subsidiary companies, each focusing on different elements of enterprise use cases with VR and AR,” Bentovim said. “Each one of our companies has their own brand, their own team, their own technology that they're building. But they're working together as part of the Glimpse ecosystem, sharing know-how, technology, go-to-market, and so on. Our positioning is to become the leading software and services, enterprise-focused VR/AR company as this industry is emerging.”
Glimpse made its debut on the Nasdaq under the ticker VRAR in July with a $14.1 million IPO. It followed that with a listing on the Frankfurt Stock Exchange under the ticker 9DR in October. Bentovim said going public at an earlier stage to create more market awareness of the company and to offer more opportunities to investors amid the tailwinds brought on by the adoption of immersive digital technology like the metaverse, AI and blockchain
“Every year we see significant growth in the industry and awareness by all the customers of ours. All the big organizations understand what immersive technologies can bring to them and are looking for scalable partners to work with them,” Bentovim said. “That's where we're positioning the combined company.”
