Skift take
Sqills has won more contracts from rail operators to upgrade their inventory, reservation and ticketing software than any other technology provider in recent years. This acquisition therefore makes sense.
Sean O’Neill, Skift
Siemens Mobility announced Thursday that it has signed an agreement to acquire Sqills, a railway software company based in the Netherlands, for 650 million dollars (550 million euros). The deal highlights increased interest in intercity rail around the world as the impacts of climate change become more apparent and a new wave of technology becomes available.
Sqills is a vendor of cloud-based inventory management, reservation and ticketing software for rail transport operators around the world. Founded in 2002, it has not raised any external investments.
For years, Siemens’ HaCon unit and Sqills have competed with other vendors, such as Amadeus, IBM and SilverRail, to offer operational tools to rail companies. But Sqills had a streak of business wins in Europe before the pandemic struck. Today, 33 operators, such as SNCF, Irish Rail, Rail Delivery Group, SJ, Via Rail and Eurostar, use its services.
The company employs 160 people and forecasts 2022 revenue of around $ 47 million (40 million euros). This represented growth from the pre-pandemic year of 2019, when Sqills generated roughly $ 25 million in revenue.
“The acquisition of Sqills is a perfect example of how Siemens combines the real and digital worlds to empower its customers in their transformation,” said Roland Busch, Chairman and CEO of Siemens AG, who announced the deal Thursday. . “At the same time, Sqills supports our growth trajectory for digital services and is an excellent example of applying our capital allocation criteria through targeted acquisitions. “
Sqills’ first customer was a small German rail operator, in 2010. Squills bills on a volume-times-price sliding scale model.
The agreement comes against a backdrop of changing dynamics in the European rail market. The recent deregulation of European rail markets and increased interest in rail as a greener option for intercity travel than flights could increase pressure on rail operators to upgrade their reservation and management software. stocks. Many operators are still working on reservation systems dating from the 1980s and 1990s.
New cloud-based systems allow operators to test changes to their business models faster while operating at a lower unit cost. This can allow experimentation with a pricing structure, origin and destination pricing, zone pricing and distance-based pricing.
Operators use Sqills’ inventory system, then connect with companies like Trainline, SilverRail and Amadeus to distribute their tickets to agencies.
Siemens Mobility has many customers in Asia-Pacific and the Americas that may be subject to cross-selling on Sqills products. The German tech giant plans to integrate Sqills’ S3 Passenger platform with its other offerings, including Hacon, eos.uptrade, Bytemark and Padam Mobility.
Sqills doesn’t do a lot of custom work. About 95 percent of operators’ requirements are already standard capabilities and options in its system. Each operator gets their own version of the software from Amazon Web Services, and the operator’s internal teams run it. This is different from a unified cloud-based model, where an outage in one location could lead to the downfall of all customers.
However, some customization is typical for linking disparate systems from different vendors, such as an ATM, with railway accounting software.
The acquisition is expected to be finalized in the first quarter of fiscal 2022.
“To dramatically increase the number of passengers on the tracks and meet our climate targets by 2030, we need to provide passengers with a more optimized process that allows them to transparently identify and use all of the rail services we offer. Said Michael Peter, CEO of Siemens Mobility.
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