Posts Tagged ‘Kaleil Isaza Tuzman’

More Broadcast Vendor M&A: Kit Digital Buys ioko for $79.4m, Completes Buying Spree

broadcast technology market research, Broadcast Vendor M&A | Posted by Joe Zaller
Apr 11 2011

IPTV asset management solutions provider Kit digital capped a multi-year acquisition spree last week with the purchase of ioko365, a provider of managed cloud-based platform solutions for multi-screen video delivery, for $79.4m.

Kit digital has made no secret of its intention to grow its market share through strategic M&A activity, and the company’s execution has been interesting to watch:

 

With the announcement of its intention to purchase ioko, Kit digital has finally revealed its long hinted-at “transformative” deal.

Company chairman and CEO Kaleil Isaza Tuzman said the ioko deal “represents the culmination of a three-plus year dedicated process to achieve global scope and market share in the IP video platform software sector, both from a geographical and capabilities perspective. It also represents the successful conclusion of a carefully managed acquisition process for which we raised outside equity capital in December 2010, and which necessitated the navigation of complex shareholder and regulatory challenges.”

According to Kit digital, ioko has 380 employees and full-time contractors and $54m in revenue, comprised of a combination of recurring managed service fees, software licenses, maintenance fees and  professional services. Kit says ioko is profitable, and that it expects the deal to be accretive on both an EBITDA and cash-flow multiple basis.

Based on the closing price of KIT digital common stock of $11.51 on April 8, 2011, the total gross consideration KIT digital will pay upfront for ioko is approximately $91.4m, comprised of $74m in cash and 1,509,805 restricted shares of KIT common stock. After adjusting for approximately $19m of cash and approximately $9m of additional positive net working capital expected on ioko’s balance sheet at the time of closing, the net upfront consideration to be paid for ioko is expected to be approximately $63.4m on a debt-free and cash-free basis.  The net upfront consideration of $63.4m is exclusive of performance-based earn-outs, incentive and personnel retention payments, which are estimated not to exceed $16m over a period of two and a half years after closing, payable in KIT digital restricted stock. Therefore, over time, prospective net consideration is expected not to exceed $79.4m in total.

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Related Content:

KIT digital Acquires ioko, Solidifies Position as Global Leader in IP Video Management and Delivery

More Broadcast Vendor M&A: Kit Digital Buys Three Companies for $77m, Says Larger Acquisition is Coming

More Broadcast vendor M&A: Kit digital Acquires Polymedia for $34.4 Million

KIT digital Reports Q4 and Fiscal 2010 Results, Raises Guidance, Says Big M&A Deal Still on Track

KIT digital Sells $110.4 Million of Stock, Says it will use Proceeds for Broadcast Industry M&A

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KIT digital Reports Q4 and Fiscal 2010 Results, Raises Guidance, Says Big M&A Deal Still on Track

Broadcast technology vendor financials, Broadcast Vendor M&A, Quarterly Results | Posted by Joe Zaller
Mar 17 2011

IPTV Asset management provider Kit digital reported that its revenue for the fourth quarter of 2010 was $38.4m, more than double the same period a year ago, and an increase of 39% versus the previous quarter.   

The company posted a net loss of $8.5m on a GAAP basis during the quarter, compared to a net loss of $8m in the previous quarter, and a net loss of $15.6m during the same period a year ago

On a geographic basis, the EMEA region contributed approximately 45% of revenue during the quarter, with Asia-Pacific and the Americas contributing 35% and 20% respectively.

For the full year 2010, the company posted a GAAP net loss of $35.3m on revenue was $106.6m.  Revenue increased 125% versus 2009.  EBITDA (a non-GAAP measure) for the year was $18.3m. On a geographic basis, the EMEA region contributed approximately 54% of revenue in 2010, with Asia-Pacific and the Americas contributing 25% and 21% respectively.

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Revenue Guidance
In guidance issued in November 2010, the company said it expects to achieve revenue in excess of $137.5 million for fiscal 2011, with an EBITDA margin of approximately 24%. This guidance was issued prior to any its recent M&A activity.

Company chairman and CEO Kaleil Isaza Tuzman said that the revenue guidance from November 2010 will be revised up based on the M&A activity, including the recent acquisitions of KickApps, Kewego and Kyte, which were announced at the end of January 2011.  “If you overlay our organic, pre-acquisition revenue target of $137.5 million with the estimated annualized run-rate of recently acquired companies — totaling around $44 million — and adjust for the approximate date of closing and any seasonality for each — it provides for an expectation of revenues in 2011 in excess of $170 million, or up more than 60% percent over 2010.”

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M&A Plans Still on Track
Much of Kit digital’s growth has been based on the numerous acquisitions the company  has made, including the recent deals for KickApps, Kewego, Kyte, and the recently announced Polymedia.  The company says it “purposefully sequenced” these deals to happen prior to a “material acquisition” that the company has been hinting at for several quarters.

Last year, Kit digital raised $110m through a stock offering, and said much of the proceeds would be used to fund M&A activities.  During the company’s earnings call with analysts, Tuzman said that the majority of these funds “continue to be dedicated to support a prospective larger acquisition in the very near future.”

Tuzman says that KIT digital plans to announce this larger transaction by the end of Q1 or in early April.

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Related Content:

Kit digital Q4 and FY 2010 earnings press release

Kit digital Q3 earnings information

Kit digital buys KickApps, Kewego, and Kyte

Kit digital sells $100m of stock, says proceeds will be used to fund broadcast industry M&A activities.

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More Broadcast Vendor M&A: Kit Digital Buys Three Companies for $77m, Says Larger Acquisition is Coming

Broadcast technology vendor financials, Broadcast Vendor M&A | Posted by Joe Zaller
Jan 31 2011

IPTV asset management solution provider Kit digital said today that it has acquired New York City-based KickApps, Paris-based Kewego, and San Francisco-based Kyte, for a total of $77.2m in three separate cash and stock deals.  Approximately $62.3m will be paid in KIT digital common stock, and approximately US$14.8 million paid in cash.

Although the announcement comes just six weeks after the company closed a $110m stock offering that it said would be used to fund industry M&A activities, company Chairman and CEO Kaleil Isaza Tuzman said that “these acquisition discussions pre-date our public equity offering completed in December 2010; we have sequenced events purposefully and the proceeds from that offering continue to be dedicated to support a larger acquisition which we are currently on track to announce later this quarter.”

New York City based KickApps is a provider of solutions that enable the creation and management of web based video, including a suite of hosted social and media applications and services designed to drive customer engagement.  KickApps’s 2010 revenue was approximately $12m, derived almost entirely from recurring software license fees. The company, which has had three venture rounds, has raised approximately $32m since it was founded in 2005.

Paris based Kewego provides video asset management solutions for managing, broadcasting and monetizing videos on IP connected devices. It reported fiscal 2010 revenues of approximately US$10.2 million, the large majority of which was derived from recurring software license fees. Kewego is profitable on a standalone basis.   The company has raised $19.4m since it was founded in 2003.

San Francisco based Kyte provides a content publishing platform that enables companies to deliver live and on-demand video experiences to websites, mobile devices and connected TVs. Kyte reported fiscal 2010 revenues of US$3.7 million, derived primarily from SaaS platform fees.  Kyte has raised $23.4m from investors since it was founded in 2006.

The company’s press release presented the benefits of these transactions as follows:

  • Acceleration of KIT’s product roadmap by 12-18 months by adding several key technology and product features, including advanced social media tools (KickApps), superior mobile publishing and software development kit (SDK) features (Kyte), and behind-the-firewall and digital signage capabilities for enterprise clients (Kewego);
  • KickApps’ applications and development tools deepen KIT’s ability to integrate new technology assets and form the foundation for accelerated client deployments;
  • Support and extension of KIT’s three major client verticals, adding particular expertise around transportation, automotive, manufacturing and fan-based media assets (such as sports teams and celebrity sites);
  • Strong management additions to KIT’s global team, including R&D and business development hubs in San Francisco and New York;
  • Aggregate transaction accretive on both a trailing revenue and EBITDA multiple basis;
  • Combined 2010 revenues of acquired companies is estimated to have been approximately US$25 million, the vast majority of which was derived from recurring licenses in a software-as-a-service (SaaS) business model;
  • The acquired companies have been growing between 20-35% per year historically on a standalone basis;
  •  Quality new shareholders, including the appointment to the KIT digital board of Santo Politi, founder and general partner of Spark Capital, the venture capital firm behind Twitter, Boxee and thePlatform.

 

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You can read the full Kit digital press release about the three acquisitions here.

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KIT digital Sells $110.4 Million of Stock, Says it will use Proceeds for Broadcast Industry M&A

Broadcast technology vendor financials, Broadcast Vendor M&A | Posted by Joe Zaller
Dec 10 2010

IPTV asset management solutions provider KIT digital said that it sold $110.4m of common stock in a recent public offering, netting the company approximately $102.5m after expenses.

As announced previously, the company says that it plans to use the proceeds of the offering “primarily to acquire and invest in competitive and complementary businesses as part of its growth strategy.”

Company chairman & CEO Kaleil Isaza Tuzman said that the company’s plan is to increase its market penetration from “current estimated 20-plus percent global market share to more than 50 percent within the next 24 months … through a vanguard of organic growth complemented by highly selective, accretive acquisitions.”

Tuzman   said that while the company will continue to evaluate small acquisitions that add geographical and sales vertical reach in areas where we could be relatively stronger, it is also considering “more transformative acquisition opportunities, where we might be able to acquire a top competitor and significantly extend our market share in one action.”

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You can read the full Kit digital announcement here.

Here is the full Kit digital offering prospectus, which provides useful company and market information.

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Kit digital Reports Q3 Results, Discusses M&A Plans. Says it Expects to Announce a Material Acquisition by Q1 2011.

broadcast industry trends, Broadcast technology vendor financials, Broadcast Vendor M&A, Quarterly Results | Posted by Joe Zaller
Nov 22 2010

IPTV asset management provider Kit digital released its third quarter 2010 results today.  It also provided lengthy commentary about the company’s business activity and M&A plans, following on from the recent disclosure that it intends to spend up to $81.75m on M&A. 

The company announced that it revenue in the third quarter of 2010 was $27.7m, an increase of 20% from in the previous quarter, and an increase of 151% versus the same period a year ago.  On a geographic basis, EMEA contributed 44% of total revenue, with the Asia-Pacific and Americas regions contributing 36% and 20% respectively.

EBITDA for the quarter was $4.4m, up slightly versus the previous quarter, and up 376% versus the same period a year ago.  On a GAAP basis, the company posted a net loss of $8m, which includes $5.1 million in non-cash charges, $4.5 million of integration expenses, and $1.3m in M&A expenses.  The company posted a GAAP loss of $342,000 last quarter and a GAAP loss of $11.1m in the in the third quarter of 2009.

For the first nine months of the year, the company posted a GAAP loss of $26.8m on revenue of $68.2m, and EBITDA of $11.6m.

For fiscal 2010, the company expects to report revenue exceeding $100m and operating EBITDA of approximately $18 million, up 109% and 267% respectively over the previous year.

“As we prepare for 2011, we see the BRIC markets continuing to be a strong growth driver for KIT digital,” said company president Gavin Campion.  “We are already very strong in areas like India, Southeast Asia, Russia and Eastern Europe. So further expansion into Brazil, Greater China and other parts of East Asia are our primary strategic objectives for 2011, as is expansion into certain areas of Europe where we are relatively weak.”

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Recent M&A Activity and Future M&A Outlook

The company also provided detail about its recent M&A activity, saying it has now integrated the operations of recently acquired MAM provider Brickbox Digital Media, video measurement vendor Accela Communications and systems integrator Megahertz Broadcast Systems, which has enabled it to cross-sell and up-sell their respective client bases. 

It also disclosed that it has reached a deal to divest some of its professional services activities for more than $12m, in a deal that is expected to close on November 30, 2010, and includes a spin-off a reseller license for the Kit digital’s VX software platform.

Commenting on plans for future M&A, Kit digital chairman & CEO Kaleil Isaza Tuzman said that the company’s aim is to extend its “current estimated 20%-plus global market share to more than 50% within the next 12 to 24 months… through a vanguard of organic growth complemented by highly selective, accretive acquisitions.

“However, we have also recently been considering more transformative acquisition opportunities, where we might be able to acquire a top competitor and significantly extend our market share in one action. It is for this purpose we announced last week that we priced an equity capital raise of $96 million.

“Having raised funds to support our larger acquisition strategy, we are currently working on a key M&A mandate, and expect to announce a material acquisition by Q1 2011.”

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You can read the full Kit digital Q3 earnings announcement here.

Information about Kit digital’s Q2 2010 results are here.

The prospectus for the company’s new share offering is here.

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KIT digital to Sell up to $110m in Common Stock – Will We See More Long-Hinted M&A?

Broadcast technology vendor financials, Broadcast Vendor M&A | Posted by Joe Zaller
Nov 19 2010

IPTV asset management provider Kit digital announced that it plans to sell shares of its common stock a public offering underwritten by Roth Capital Partners, Merriman Capital, ThinkEquity, Janney Montgomery Scott, and Northland Capital Markets.

According to a filing with the SEC, the company says it will sell 8 million shares of common stock at $12 per share, and that it has allocated an additional 1.2 million shares as an over-allotment option.  If all shares are sold, the company will collect $110.4m before expenses.   According to a separate 8K filing with the SEC, the Company expects to receive approximately $88,300,000 in net proceeds from the offering after underwriting fees and offering expenses, or approximately $101,800,000 if the underwriters’ over-allotment option is exercised in full.

This announcement comes on the heels of Kit digital filing an S-3 Shelf Registration with the SEC, under which it may sell shares of its common stock in one or more offerings up to a total dollar amount of $250m over an indeterminate period.

Although these filings did not say what the company will do with the proceeds of the recently announced offering, it has made several recent public statements that provide clues.  These include hints about M&A on multiple occasions, and the fact that it plans to achieve “long-term dominance in our industry segment.”  

When the company recently issued preliminary results for the third quarter of 2010, Kit digital chairman and CEO Kaleil Isaza Tuzman hinted at impending acquisitions, including the potential purchase of a major competitor.  ”Consistent with our previously stated strategic mandate, we continue to look at relatively small acquisitions that add geographical and sales vertical reach, which we intend to fund out of our treasury, cash from operations or limited assumption of debt. At the same time, we are considering more ‘transformative’ opportunities, where we might be able to acquire a top competitor and significantly extend our market share.”

The company also disclosed recently that it has tripled the number of shares of common stock reserved for issuance under its incentive stock plan, saying that it views stock options as an important management tool and a key means to motivate employees to continue to perform.

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You can read the Kit digital prospectus here.

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Kit Digital Announces Preliminary Q3 Results, Issues Guidance, Hints Again at M&A

Broadcast technology vendor financials, Broadcast Vendor M&A, Quarterly Results | Posted by Joe Zaller
Nov 08 2010

IPTV asset management provider Kit digital announced that it expects to report record revenue of more than $27m for the third quarter of 2010, an increase of 147% versus the same period a year ago, and an 18% improvement sequentially.  The company also said that it added more than 45 net new clients during the quarter, including telco and network operators.

Kit digital says that it expects to book a net loss for the third quarter, but did not disclose how much money it will lose.  However, the company said that its operating EBITDA (a non-GAAP measure) for the third quarter of 2010 is expected to be $4.4m, an increase of 376% versus the same quarter a year ago, and an increase of 5% versus the previous quarter.

The company issued guidance for the full year, saying that it expects to report revenue in excess of $100m for 2010, more than double 2009 revenue, and that it expects full year EBITDA to be approximately $18 million, up 267% over the previous year.  The company also said that expects organic revenue for 2011 to be in excess of $152.5m, with an EBITDA margin for the year of at least 21.5%.

Company chairman & CEO Kaleil Isaza Tuzman issued a bullish statement, saying that the company “could deliver higher operating margins in the short-term if we chose to, [but] our focus is on long-term dominance in our industry segment, and we see a unique window of opportunity to extend our leadership at this time.”

Part of its plan for industry dominance appears to include further M&A activity, and the company announced that it has recently hired botique investment bank Allen & Company LLC as a strategic advisor.  

Last month the Kit digital filed a shelf registration with the SEC under which it may to sell up to $250m in stock.  At that time, Tuzman explained the move, saying “to the extent that it became feasible to acquire one or more of our top competitors at a reasonable valuation, it is important we have the flexibility to do so.”

In today’s statement, Tuzman again hinted again at impending acquisitions, including the potential purchase of a major competitor.  ”Consistent with our previously stated strategic mandate, we continue to look at relatively small acquisitions that add geographical and sales vertical reach, which we intend to fund out of our treasury, cash from operations or limited assumption of debt. At the same time, we are considering more ‘transformative’ opportunities, where we might be able to acquire a top competitor and significantly extend our market share.”

Tuzman also talked about shedding some company assets, saying the company is “currently considering the possibility of spinning out a material portion of our professional services and non-SaaS activities that may be more beneficial to work with on an arms’ length basis, and allow us to focus even more on our core SaaS business,” and that such a deal might come as early as the fourth quarter. 

Kit digital will release its complete third quarter results in two weeks.

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You can read the full Kit digital preliminary Q3 earnings announcement here.

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Kit Digital Files S-3 Form with SEC, May Sell up to $250m of Stock in Order to “Maximum Strategic Flexibility”

Broadcast technology vendor financials, Broadcast Vendor M&A | Posted by Joe Zaller
Oct 14 2010

In a move that it calls favorable for our current and prospective shareholders, IPTV asset management provider Kit digital has filed a Form S-3 “shelf registration” statement with the SEC.

According to the company’s press release, Kit digital may under this shelf registration sell shares of its common stock in one or more offerings up to a total dollar amount of $250m over an indeterminate period.

Last week, the company announced that its shareholders had voted to increase the number of shares outstanding in the company by 167%.  CEO Kaleil Isaza Tuzman said the recently approved increase in shares put Kit digital “in a position to file this S-3, in line with our standing corporate policy of maintaining a large outstanding shelf in order to maintain maximum strategic flexibility.” 

This flexibility apparently includes the possibility of funding large acquisitions. 

According to the company’s S-3 filing, the company that in currently intends to use the estimated net proceeds from the shares of its stock for working capital and “to finance the costs of acquiring, investing in, or creating joint ventures with competitive and complementary businesses, products and technologies as a part of our growth strategy.”

However, in the filing the company said that it has “no current commitments or agreements with respect to any such acquisitions or investments.”

Tuzman said that the company’s existing strategy of acquiring small firms that companies that complement Kit digital’s current structure does not require additional outside equity capital, and will continue to be financed with cash from operations. “However,” said Tuzman, “to the extent that it became feasible to acquire one or more of our top competitors at a reasonable valuation, it is important we have the flexibility to do so—including accessing the capital markets efficiently and quickly.”  Tuzman also said that the shelf registration also it makes it easier for certain types of privately held buyers to evaluate KIT digital.

The company’s press release noted that the S-3 filing was procedural and that its specific use or application has yet to be determined.

“To be clear” said Tuzman, “with more than $45 million in cash on our balance sheet and strong, positive operating cash-flow, we do not have an immediate need to raise capital for corporate purposes or strategic acquisitions at this time. If we choose to sell shares under this shelf registration, it will be with the purpose of closing on an imminent corporate opportunity.”

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You can read the full Kit digital press release about the filing here.

Kit digital’s SEC Form S-3 filing can found here.

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More Broadcast M&A: KIT Digital Buys MAM Provider Brickbox Digital Media

broadcast industry technology trends, broadcast technology market research, Broadcast technology vendor financials, Broadcast Vendor M&A | Posted by Joe Zaller
Sep 24 2010

IPTV asset management technology supplier Kit Digital announced today that it has acquired privately-held Brickbox Digital Media for $10.1m in cash and stock. 

In addition to the upfront purchase price, the deal also includes an earn-out provision whereby Kit Digital will pay Brickbox shareholders 10% of forward revenues from Brickbox over a four-year period, subject to a $20 million annual revenue threshold for each year and certain profitability thresholds.

This is the third acquisition Kit Digital has made this month.  Just before the IBC show, the company announced that it had purchased both UK-based systems integrator Megahertz from Canadian parent Azcar, and Accela Communications, a provider of software and services aimed at the production, delivery and measurement of interactive IP-based video content.

Based in the Czech Republic, Brickbox provides asset management solutions that act as an intermediary between content owners and distributors, offering products and services that include mezzanine file management, localization, digital cinema mastering, and authoring of media for replication.

Brickbox which has  approximately 85 employees in its main Prague and Sofia offices as well as additional staff in the U.S., UK, Bulgaria, Hungary, Poland, Romania and Slovakia, earned a profit of $1m on $12m of revenue over the past 12 months. The company’s clients include 20th Century Fox Entertainment, Warner Home Video, Universal Studios, and numerous European content distributors.

Kit Digital chairman and CEO Kaleil Isaza Tuzman  said that Brickbox was “a choice acquisition for us which we had our eyes on for some time, extending our capabilities and commercial reach in premium content management and services for the major and ‘mini-major’ Hollywood studios.”

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You can read Kit Digital’s full press release about the purchase of Brickbox here.

You can read the full press release about Kit Digital’s purchase of Accela and Megahertz here.

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Kit Digital Reports Strong Q2, Gives Positive Guidance, Hints at Acquisitions

broadcast technology market research, Broadcast technology vendor financials | Posted by Joe Zaller
Aug 17 2010

IPTV technology provider Kit Digital reported their Q2 results Monday.  Revenue for the quarter came in at $23.1m, an increase of 120% versus the same period last year, and an increase of 33% versus the previous quarter.

About 75% of the company’s revenue during the quarter came from fees for the company´s “VX” IP video platform solutions, while approximately 25% came from professional services.

On a geographic basis revenue was split as follows, 41% from EMEA; 36% from the Americas and 23% from Asia-Pacific.

Net loss for the second quarter 2010 included $3.1 million in non-cash charges, including $1.1 million in stock-based compensation and $2.0 million of depreciation and amortization; a non-cash derivative gain of $2.4 million; $3.3 million in integration expenses related to the reorganization and integration of recently acquired companies; and $886,000 in merger and acquisitions expenses, including investment banking advisory and legal fees.

The company’s earnings press release highlighted several key client wins during the quarter, and also provided positive guidance for the rest of the year.  Kit Digital chairman & CEO, Kaleil Isaza Tuzman said “As we move through the midpoint of Q3, we remain on track to exceed our original organic financial targets for fiscal 2010… We estimate our organic growth in the second quarter exceeded 50% on a year-on-year basis.”

Gavin Campion, president of KIT digital, said that the company is “committed to expanding our industry leadership position by going from our current estimated 15%-20% global market share to more than 50% over the next couple of years, by complementing strong organic growth with highly selective, accretive acquisitions.” Campion also said that the company continues to see opportunity in the mobile market. 

You can read the full Kit Digital earnings press release here.

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