Xero Limited has announced the acquisition of Planday, a workforce management platform that simplifies employee scheduling; allowing businesses to forecast and better manage their labour costs. The platform has more than 350,000 employee users across Europe and the UK.
Strategically aligned with Xero’s intention to expand the small business platform, the acquisition of Planday will help more small businesses save time and money, support more flexible forms of work and deal with increasing compliance requirements, all in order to look after their people.
Planday is an open platform that integrates with accounting solutions, including Xero, and third-party workforce-related apps, to deliver a real-time view of staffing needs and payroll costs, alongside key business performance metrics. When combined with an accounting solution, such as Xero, Planday is able to provide insights to a business or its advisor that help them to adjust staffing levels to match trading conditions and control labour costs, which often poses as an employer’s largest expense.
Xero CEO Steve Vamos said of the acquisition: “The takeover of Planday aligns with our purpose to make life better for people in small businesses and their advisors. The platform’s workforce management capability helps small businesses to respond to the rapidly changing nature of work. Planday also addresses the growing need for flexibility and rising compliance demands within the workplace.”
Planday’s cloud-based technology offers significant flexibility and self-service functionality through a mobile app. Employers and employees can communicate easily, collaborate on scheduling, track time and attendance, manage payroll, vacation, absence, and other labour related compliance needs.
Following the acquisition, Planday will expand its presence into other markets where Xero operates, supporting Xero’s long-term growth plans.
With an upfront payment of €155.7 million and a subsequent earnout payment of up to €27.8 million based on product development and revenue milestones, the total potential consideration for the acquisition of Planday is €183.5 million. Approximately 45% of the upfront consideration will be payable in shares in Xero Limited and 55% will be settled in cash. Up to 50% of the earnout payment will be settled in Xero Limited shares with the remainder being paid in cash.
Completion of the transaction is expected in Q1 of Xero’s financial year ending 31 March 2022, and is subject to the satisfaction of closing conditions. The acquisition is expected to contribute approximately three percentage points of additional operating revenue growth for Xero. Transaction, integration and operating costs are anticipated to have a modest negative impact on Xero’s FY22 EBITDA.
Planday CEO Christian Brøndum added: “We are beyond excited for this next step in Planday’s journey. Our mission is to make our customers’ day work and make life easier for both employers and employees. This mission fits perfectly with Xero’s passion for small businesses, for people, for growth and for communities. We’re looking forward to working within the Xero family to build a strong launchpad for businesses and employees to manage their time and joint potential.”