Very Nearly A Unicorn
The Irish deal that attracted most attention around the world in 2023 was SoftBank’s acquisition of a 51% stake in Sandyford software developer Cubic Telecom, for a consideration of €473m. It was quite the outcome for the Sandyford business, which at the end of 2022 had racked up losses of €82m. The company’s turnover in 2022 was €56m, up from €43m, and the Tokyo buyer sees this trend accelerating in future years.
Cubic Telecom’s Platform for Application & Connectivity Enablement (PACE) enables manufacturers of vehicles and agricultural machinery to monitor, manage and update many aspects of a vehicle or device in real-time, via mobile connectivity. Vehicles and devices can receive new features and functionality over-the-air to ensure the best user experience.
Cubic says that c.190 mobile telecoms operators, cloud service providers, OEMs and chipset manufacturers integrate with PACE for software updates, live diagnostics and data collection. Cubic describes its framework as ‘adopt & drop’.
Cubic Telecom launched its connectivity platform in 2016 and, through agreements with mobile network operators, the company currently connects more than 15 million vehicles, adding 450,000 new vehicles a month, according to SoftBank. Cubic’s customers include Audi, Volkswagen, Porsche, Seat, Skoda, Lamborghini, Bentley, Harley Davidson, Iveco, and John Deere.
Cubic’s growth is in line with fancier dashboards, as in-vehicle displays and entertainment systems become more complex, with voice-activated features, driver monitoring systems, and displays related to automated driving. Electric vehicles rely heavily on software to function, and their market share is increasing all the time.
Credit to CEO Barry Napier (49) for keeping the show on the road since becoming a director in 2012. Cubic Telecom Ltd was originally founded in 2006 as a Cork telco venture by Pat Phelan, who exited the business in 2013.
When Cubic pivoted to concentrate on mobility solutions for IoT, machineto-machine and connected device companies, Audi and chip maker Qualcomm took notice, with the pair investing €18m in 2015, along with Napier’s BPI Telecom.
Another major funding round occurred in August 2017, when €40m was raised from Audi, Qualcomm, Valid Soluciones Tecnologicas, and Irish taxpayers through the Irish
Strategic Investment Fund. In July 2019, Cubic Telecom lined up a €23.5m credit line with the European Investment Bank, and €7m was drawn down in August 2020.
Cubic Telecom added 91 new hires in 2022, bringing total headcount to 263 people. Employees are well rewarded: average salary in 2022 was €86,000, and for qualifying employees pay was topped up with 25% of payroll in share awards.
The SoftBank announcement did not disclose which Cubic Telecom shareholders sold some or all of their shares, in a deal that valued Cubic Telecom equity at €927m.
Prior to the deal, Cubic Telecom’s main shareholder was BPI Telcom (34.6%), where Barry Napier is 80% shareholder and Barry Higginbotham is on 20%. Cariad SE, representing Audi/Volkswagen, owned 22.7%, with Qualcomm on 19.4%. ISIF and VST each owned 6.3% stakes, Clonskeagh venture capital investor ACT owned 4.6%, and Kevin Warren owned 2.3%.
Individuals with stakes under 1% included Denise Howlin, Nikolas Jung, Gerry McQuaid and Shane Sorohan, though that list excludes multiple staffers with share options that will now vest.