Join our community of smart investors

IMImobile expands in the US

The software group has agreed to acquire US company Sumotext, enhancing its presence in North America
November 2, 2017

Shares in IMImobile (IMO) fell more than 3 per cent after the software group announced plans to acquire US-based communications platform provider Sumotext. IMImobile will pay between $4.5m and $6m (£4.5m), based on Sumotext’s cash profits performance for the 12 months post-acquisition. Chief executive Jay Patel says this move offers a foundation to expand the group’s presence in the US.

IC TIP: Buy at 200p

While trading was in line with bosses’ expectations for the first half to 30 September, increased sales and marketing spend of around £0.5m relating to the purchase could impact the group's underlying cash profits for the full-year. Prior to this expenditure, underlying cash profits were expected to meet current expectations for the year to March 2018, management said. 

Analysts at house broker Investec cut their forecasts for cash profits by £0.5m to £12.4m for the 12 months to March 2018. However, they have conservatively raised their 2019 expectations by £1m to £14.4m when Sumotext “should be accretive”. They say the acquisition “looks low risk, but astutely priced”.

For IMImobile, one of the prime attractions of this acquisition was the experience and skills of its founder Tim Miller. Mr Miller will join the larger group as a member of the senior management team, remaining as leader of Sumotext. 

This is not the first acquisition made by IMImobile, nor the largest. In March this year, the group acquired Infracast, a provider of multi-channel messaging applications, for an initial consideration of £8.2m to be paid in cash and shares - with a further possible deferred consideration.