MGI Research

Sunday, Nov 29th

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MGI 360 Ratings - ModusLink in Commerce & Payment Platforms

MGI 360 LogoSUMMARY: We are initiating coverage of ModusLink in the Commerce and Payment Platforms (CPP) market with an MGI 360 Rating of 47 and a Neutral outlook.

OPINION: ModusLink provides a full-service e-commerce processing and fulfillment solution via a Merchant of Record model with a particular focus on enterprises looking to enable cross-border commerce for both physical and digital goods. The solution brings together services such as payments, fraud detection, chargeback handling, entitlement management (Poetic), collections, customer service (call centers) and return shipping. The technology platform supports headless commerce operation with interfaces to ShopifyPlus and BigCommerce. The solution is often missed by companies looking for e-commerce platforms with fulfillment capability as ModusLink is still largely positioned (and in our view incorrectly) as a supply chain management business. While still operating largely under the radar, the company has been slowly upgrading its management team, including a new CEO and seeking avenues for re-positioning, increased visibility and expansion of partnerships. An underdeveloped marketing capability and a limited distribution channel challenge ability to accelerate growth.

USE CASE: B2B & B2C enterprise technology vendors looking for API-first commerce solution to support cross-border sales (direct or marketplace) of physical and digital goods.

COMPANY DESCRIPTION: ModusLink is one of the two major operating divisions of publicly traded SteelConnect (NASDAQ: STCN), a holding firm controlled by New York investor Warren Lichtenstein. We estimate ModusLink net revenues of about $380M, topline growth of 18 % and a modestly positive EBITDA margin. even as it is held back by a limited distribution channel. The firm is led by a new CEO (June 2020), has a headcount of 1300 with HQ is Waltham, MA and satellite offices & fulfillment sites in Mexico, Singapore, Utah, Netherlands, Ireland, Australia, Japan, China and the Czech Republic.

COMPETITORS: DigitalRiver, Arvato, ScaleFast

ABOUT MGI 360 RATINGS

MGI 360 Ratings is a comprehensive system for evaluating technology companies. IT organizations use MGI 360 to track suppliers, assess purchasing risks and identify promising new vendors. Vendors utilize MGI 360 to track their markets and evaluate partners. Institutional investors use MGI 360 for independent assessment of tech companies. MGI 360 ratings help lower costs, save time, reduce risks, and identify new opportunities.

The MGI 360 ratings are on a scale from 0 to 100 and reflect company opinions of MGI analysts in five key areas on a scale of 0 to 20:

  • PRODUCT: How strong is the product competitive position?
  • MANAGEMENT: How competent and experienced is the management team?
  • CHANNELS: Does the company have a sales capability and channels needed to bring products to market?
  • STRATEGY: Does the company have a realistic view of the opportunity and a compelling strategy for success?
  • FINANCE: Is the company growing and profitable?

Each of these key criteria is subdivided into numerous sub-categories. In total, over 149 criteria are combined to generate an MGI 360 rating in each specific market space. Companies can have one or more MGI 360 rating - one for each market. MGI 360 ratings are revised as important developments occur. While the MGI 360 rating process is comprehensive, this scoring system is not meant to be a predictor of company solvency, liquidity, absence of accounting fraud or stock performance. Access to MGI 360 Ratings is by subscription.

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MGI Research is an independent industry research and advisory firm focused on disruptive trends in the technology industry. Through ratings, industry benchmarks, best practices groups, subscription research, market forecasts, advisory engagements, industry studies and conferences, MGI Research helps clients identify opportunities for reducing IT costs and minimize technology risks. MGI Research analysts work closely with business and technology organizations to help make timely go/no-go IT investment decisions, optimize vendor relationships, and create practical strategies for new initiatives in agile billing, payments management, order management, CPQ, contract lifecycle management and other elements of agile monetization platform (AMP).

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