The two companies worked out a one-year deal that will have Sente mining for possible tech companies that could be integrated into GXO warehouses or other parts of the Greenwich, Conn.-based logistics company.
GXO chief information officer Sandeep Sakharkar said the partnership, announced Monday, would help find “emerging technologies” that could “develop game-changing solutions to make logistics a competitive advantage.”
Sente acts as a middleman between investors and startups, helping companies, family offices and other investors find potential investment targets across transportation, supply chain, food and circular manufacturing technologies.
Sente said the startups it has worked with have raised more than $35 million, with revenue across those companies exceeding $80 million.
The push for access to more tech comes amid a strong first quarter for GXO, which has roughly 200 million square feet of warehousing space.
The company reported first-quarter revenue of $2.1 billion, up 14 percent from the prior year period. Net income for the quarter totaled $37 million, up from $14 million in the year-ago period.
Some $340 million in new business trickled into GXO during the three-month period, with first-time logistics outsourcing contracts from German e-tailer Zalando and French retailer Carrefour, while the company saw expanded business from Abercrombie & Fitch.
GXO doesn’t just work with retail and fashion companies, with customers also hailing from the automotive, technology, food, consumer packaged goods and aerospace industries.
“Year ago, logistics—I have to say, sadly, many years ago—it was viewed as a commodity,” GXO CEO Malcolm Wilson told analysts earlier this month during the company’s quarterly earnings update of how the logistics industry has evolved. “It’s no longer viewed as a commodity today. It’s viewed as an essential part of doing business. It can make a difference to the success of any company when it comes to the consumer experience.”
Wilson said GXO’s e-commerce fulfillment business is “going like a rocket,” and, while the company is seeing its customers report shifts back to brick-and-mortar shopping, they’re still placing more of their business online.
Tech, akin to what the Sente deal is expected to bring, has been a big part of the GXO story in more recent years.
The company reported a 40 percent increase in automation in its U.S. facilities in the first quarter. About one-third of the company’s overall revenue at the end of the period came from what chief investment officer Mark Manduca called “highly automated sites” within the GXO network. The ability to create custom 3D packaging for online orders to reduce waste was also recently rolled out.
“These technological advancements not only drive our business forward, they are well aligned with our firm belief that how we do business is every bit as important as what we do,” Manduca told analysts this month.
GXO spun off from trucking company XPO Logistics last August to become a separate, publicly traded business.
In January it made a bid for Clipper Logistics at 920 pence ($12.53) a share, reflecting about a 49 percent premium on the British firm’s closing price at the time. Clipper shareholders agreed to the deal last month.
The deal is likely to close in September, but could come earlier.
“When we made a spin as a business, we created a list of companies that we admire, that we thought would make really super M&A opportunities, and Clipper was right at the top,” Wilson said.
Clipper is expected to bring about $48 million in cost synergies to GXO and an expanded footprint in markets such as Germany, in addition to an adept hand at services such as returns.
“Clipper is very advanced, more so—pains me to say it, but more so even than GXO, when it comes to reverse logistics, returns management,” Wilson said. “It’s a real scale. It’s an art for them. We got a lot of very sophisticated software that drives it. So that is going to help us tremendously [to] leverage those skill sets and those technologies across the rest of GXO’s customer base, not just in U.K., continental Europe, but even bringing it out to North America.”
GXO shares are down about 39 percent since the start of the year and were trading at $54.47 Monday afternoon with a recent market cap of $6.2 billion.