KIT digital (KITD) Acquires ioko365 Ltd for $79.4 Million; Issues Preliminary Q1 Results
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KIT digital, Inc. (NASDAQ: KITD) signed a definitive agreement to acquire 100 percent of the capital stock of San Diego, California and London, U.K.-based ioko365 Ltd ("ioko") for total prospective net consideration of approximately $79.4 million, including future performance-based incentive payments. (All currency figures are in U.S. dollars.)
ioko currently generates approximately $54 million in annualized revenues related to IP video asset management, through a combination of recurring managed service fees, software licenses, maintenance fees and professional services.
KIT digital management estimates that overall restructuring charges from the ioko and Polymedia acquisitions will not exceed 10%-12% of the aggregate purchase consideration. KIT management expects these charges will be incurred and completed by the end of Q3 2011 allowing for greater convergence of GAAP accounting and cash-flows by Q4 2011 and beyond.
Growth Outlook Based on preliminary unaudited information, KIT digital management expects to report revenue for the first quarter of 2011 of at least $34 million. As unadjusted for the divesture of certain operations in the fourth quarter of 2010, this compares to $38.4 million in the previous quarter and $17.4 million in the first quarter of 2010.
"Our preliminary first quarter 2011 results were strong, when properly adjusted for the sale of a portion of our professional services business at the end of Q4 and the typical sequential negative seasonality of Q1 over Q4 throughout the digital media industry," said Isaza Tuzman. "We expect our Q1 2011 revenue to be flat to up slightly relative to Q4 2010 on an organic basis, when you adjust for the acquisitions completed in Q1 2011 and extract the $5.6 million in revenue from the divested services business from the total revenue we reported in Q4 2010. Given the seasonal lower usage levels in Q1, these relatively strong results were driven by new client additions and up-selling across newly acquired client bases."
ioko currently generates approximately $54 million in annualized revenues related to IP video asset management, through a combination of recurring managed service fees, software licenses, maintenance fees and professional services.
KIT digital management estimates that overall restructuring charges from the ioko and Polymedia acquisitions will not exceed 10%-12% of the aggregate purchase consideration. KIT management expects these charges will be incurred and completed by the end of Q3 2011 allowing for greater convergence of GAAP accounting and cash-flows by Q4 2011 and beyond.
Growth Outlook Based on preliminary unaudited information, KIT digital management expects to report revenue for the first quarter of 2011 of at least $34 million. As unadjusted for the divesture of certain operations in the fourth quarter of 2010, this compares to $38.4 million in the previous quarter and $17.4 million in the first quarter of 2010.
"Our preliminary first quarter 2011 results were strong, when properly adjusted for the sale of a portion of our professional services business at the end of Q4 and the typical sequential negative seasonality of Q1 over Q4 throughout the digital media industry," said Isaza Tuzman. "We expect our Q1 2011 revenue to be flat to up slightly relative to Q4 2010 on an organic basis, when you adjust for the acquisitions completed in Q1 2011 and extract the $5.6 million in revenue from the divested services business from the total revenue we reported in Q4 2010. Given the seasonal lower usage levels in Q1, these relatively strong results were driven by new client additions and up-selling across newly acquired client bases."
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