When IBI Group bought Fredericton transportation software-maker HotSpot in June for its recurring revenue business, the Toronto engineering and technology company agreed to pay a total of $5.74 million, regulatory filings reveal.
IBI paid $2.76 million in cash at the close, with $2.97 million to be paid over the next three years, contingent on the HotSpot business unit meeting performance targets. Management has also earmarked another $1.47 million to continue employing HotSpot’s roughly 25-person team.
“HotSpot has a nice recurring revenue business,” said IBI Global Director of Innovation Deepak Darla at the time of the deal.
“And I think that is one of the strategic directions also of IBI, where we want to increase the recurring business. That obviously gives a great resilience to the business.”
IBI said in its quarterly report that $3.75 million of the purchase price was based on HotSpot’s assets, with the remaining $2 million tied to “the expected growth, synergies and value of HotSpot’s workforce.”
Founded in 2013, HotSpot sells software that allows users to pay for parking from their phones, or pay for and receive real-time updates about bus services, as well as order and pay for taxis. The company has more than 460,000 mobile users in 80 customer cities and university campuses across Canada and parts of the United States.
IBI, meanwhile, sells a range of smart city-style technology for buildings ranging from high rises, to industrial facilities, to hospitals.
The companies' first interactions came as a result of IBI launching CurbIQ — a business unit that operates like a startup and sells technology to gather and analyze data about the impact of street parking rules. The cities that became CurbIQ customers were also frequently HotSpot customers, and the two companies often integrated elements of each other’s technology into their services on a customer-by-customer basis.
HotSpot founder Phillip Curley, now Head of HotSpot at IBI Group, has said he hopes IBI’s larger war chest and better industry connections will help scale the business faster.
More broadly, IBI’s net income grew by just shy of $1 million last quarter at $9.2 million, compared to $8.3 million for the same period in 2021, and shares have been trending upwards, reaching $19.30 Wednesday.