Fleetmatics won't be traded on the NYSE any further. It brings 42,000 customers and about 826,000 subscribers to Verizon.
"With the close of this transaction, Verizon Telematics is squarely positioned as the global leader in fleet and mobile resource management, leveraging the combined strength of three world-class platforms, now serving every segment of the market," says Verizon Telematics chief Andrés Irlando.
Verizon had announced a deal in June to buy fleet-management software maker Telogis as well. The Fleetmatics deal is in line with recent transaction multiples of 6 to 9 time recurring revenue, Wong says.
“There has been significant consolidation across the fleet management space from across the auto ecosystem (OEMs, telco, pure play FMS vendors (FLTX mainly), fuel card providers, etc.) so we believe the bidding process was competitive," he writes.
RBC's Matthew Hedberg calls it a "healthy multiple," saying the deal reflects "6.1x FTM EV/S vs. 5.1x for software acquisitions."
Despite today's jump, Fleetmatics at $59.60 isn't quite that stock's 52-week high: It hit $62.86 in December and had fallen 31.7% since then.
Verizon (NYSE:VZ) announces it will acquire Fleetmatics (NYSE:FLTX) for $60.00 per share in a deal valued at approximately $2.4B. Shareas of FLTX closed at $42.96 on Friday.
“Verizon and Fleetmatics share a vision that the SaaS-based fleet management solution market is extraordinarily large, lightly penetrated, global and fragmented which can best be attacked together with a world class product offering and the largest distribution channel in the industry,” said Fleetmatics CEO Jim Travers.
The acquisition is subject to customary regulatory approvals and closing conditions, including the approval of Fleetmatics’ shareholders and the sanction of the Irish scheme of arrangement by which Verizon will acquire Fleetmatics by the Irish High Court, and is expected to close in the fourth quarter of 2016.
As a result of today’s announcement, Fleetmatics has cancelled its earnings call previously scheduled for August 9, 2016 and has withdrawn its most recent guidance with respect to 2016.
Though FleetMatics (FLTX -11.7%) beat Q4 EPS estimates and posted roughly in-line revenue, the company is guiding for Q1 revenue of $78M-$80M and EPS of $0.33-$0.35, below a consensus of $80.2M and $0.39.
Full-year guidance is healthier: Revenue of $342M-$346M (21% Y/Y growth at the midpoint) and EPS of $1.72-$1.80 vs. a consensus of $343.7M and $1.75.
On the earnings call (transcript), CFO Stephen Lifshatz mentioned hiring activity will affect FleetMatics' Q1 bottom line. "[W]e tend to do quite a bit of hiring early in the year and have a set of expenses that go along with that and see the productivity gains on a quarter-by-quarter basis."
Meanwhile, CEO Jim Travers suggested his company is willing to offer discounts to win some large deals. "We're the market share leader. As reported and disclosed in previous calls, we have seen some of our competitors get pretty aggressive trying to secure a business. And in some cases, we're going to walk from it. And others ... we're going to go after it." SA author Cauchy raised concerns about competitive pressures in November.
Active vehicles under subscription rose by 54K Q/Q in Q4 to 709K. GAAP operating expenses rose 31% Y/Y to $45.6M - $24.7M was spent on sales/marketing, $14.9M on G&A, and only $6M on R&D. 2015 free cash flow totaled $45.2M, and FleetMatics ended the year with $177M in cash and $23M in debt.
In addition to beating Q3 estimates, Fleetmatics (NYSE:FLTX) has guided for Q4 revenue of $76.5M-$77.5M and EPS of $0.37-$0.40, favorable to a consensus of $76.2M and $0.37.
The SaaS fleet management software vendor has also announced it's buying Italian peer Visirun for an undisclosed sum. Visirun's platform claims 3K customers and has 28K vehicles under subscription. "Italy was a natural next step in our European expansion plans and builds off of our recent entries into The Netherlands and France," says CEO Jim Travers. Fleetmatics notes Italy is Europe's third-biggest telematics market, and that an estimated ~5% of Italian commercial vehicles currently use a telematics solution.