IMImobile PLC (LON:IMO), a cloud communications software and solutions provider, is pleased to announce that it has agreed to acquire the trade and assets of the Sumotext Corporation (“Sumotext”), an established US based communications platform provider (“the Acquisition”). The consideration, will be between $4.5 million and $6 million, depending on EBITDA performance of the acquired business during the first 12 months following the Acquisition.
Sumotext helps brands, agencies and non-profit organisations communicate and complete commercial transactions with mobile audiences via SMS and MMS. The Acquisition is therefore complementary to both IMImobile’s product set and customer base.
Management believes that this strategic acquisition provides a platform to launch IMImobile’s product offering to the enterprise market in the US. As a result of the Acquisition the Company expects to make significant investment in sales and marketing expenses for the US market during the current year and that the Acquisition will be earnings enhancing in the year ending 31 March 2019.
Highlights:
Acquisition
· Sumotext is an experienced business in the US communications platform market and has various clients made up of a government agency, travel companies, retailers, healthcare companies and other brands, agencies and non-profit organisations.
· Sumotext’s customer and product portfolio is complementary to existing IMImobile products and solutions, providing significant cross-sell and up-sell opportunities.
· This Acquisition is aligned with pursuing IMImobile’s broader strategic plan to enhance its position in the US market.
· The Acquisition is expected to enhance Group earnings during the year ending 31 March 2019.
Trading update
· Trading for the six months ended 30 September 2017 in line with directors’ expectations.
· Significant investment of approximately £0.5m in sales and marketing activities in the second half of the current financial year to take advantage of market opportunities for cloud messaging product portfolio
· Current year revenue and gross profit expected to be above market expectations.
Commenting on the Acquisition Jay Patel, Chief Executive Officer of IMImobile said:
“The acquisition of Sumotext strengthens our position in the US communications software market. The Sumotext team is experienced in selling and delivering business critical communication solutions to a number of leading US brands. This acquisition provides a strong platform for growth into the enterprise market in North America.”
Background to and reasons for the Acquisition
Sumotext is an established and leading provider of messaging solutions in the US, based in Little Rock, Arkansas. The Acquisition enhances IMImobile’s position in the US market and consolidates its footprint within the region. The US market is competitive, and the experienced team at Sumotext will provide valuable expertise as well as an established customer base made up of a government agency, travel companies, retailers, healthcare companies and other leading brands, agencies and non-profit organisations.
A key attraction of the Acquisition for IMImobile was the experience and skills of the founder of Sumotext, Tim Miller, who has agreed to join the Group as a member of the senior management team, and will maintain leadership of the Sumotext business.
The Acquisition is complementary to IMImobile’s product set, providing mobile solutions that enable businesses to manage digital interactions with their customers. As a result of the Acquisition we see many opportunities for growth in the US region and we will work to use the Sumotext business to penetrate the enterprise market, and expect it to be earnings enhancing during the year to 31 March 2019.
Trading update
The Board is pleased to provide the following trading update ahead of the Company’s interim results announcement on 21 November 2017.
The first half of the year has seen trading in line with management expectations, with good overall organic gross profit growth. The Board remains confident about the Group’s prospects for the remainder of the year and expect underlying revenue and gross profit to be ahead of expectations.
We see many opportunities for further growth, particularly in the enterprise market in the US and UK. Following the Acquisition, in order to capitalise on product leadership and market opportunities, IMImobile intends to increase sales and marketing expenses in the second half of the current financial year by approximately £0.5m, the benefits of which we expect to be realised in the financial year ending 31 March 2019. Prior to this planned investment underlying EBITDA for the full year was expected to be in line with expectations.
Gresham House Strategic PLC (LON:GHS) has a 12.1% ownership of IMImobile PLC, correct as of 29 September 2017 month end NAV announcement, released 02 October 2017
