Verizon has acquired fleet management vendor Fleetmatics for $2.4 billion in an effort to continue to expand its cellular business as it counters a slowing U.S. smartphone market and a recent revenue drop.
Fleetmatics, which is based in Dublin, Ireland, offers Web-based products that allow fleet operators to gain data about fleet vehicle locations, fuel usage, speed, mileage and more to track and reduce costs and work to increase revenue. The company also offers mobile workforce management products for business users.
Verizon is acquiring Fleetmatics, which has about 1,200 employees, less than a month after the carrier announced the acquisition of Yahoo's core internet business for $4.83 billion in July, according to an earlier eWEEK story. The Fleetmatics deal also comes just two months after the carrier bought Telogis, a cloud-based mobile enterprise management software vendor.
"Fleetmatics is a market leader in North America—and increasingly internationally—and they've developed a wide range of compelling SaaS-based products and solutions for small- and medium-sized businesses," Andrés Irlando, CEO of Verizon Telematics, said in a statement. "The powerful combination of products and services, software platforms, robust customer bases, domain expertise and experience, and talented and passionate teams among Fleetmatics, the recently-acquired Telogis, and Verizon Telematics will position the combined companies to become a leading provider of fleet and mobile workforce management solutions globally."
The acquisition is expected to be completed in the fourth quarter of 2016, the companies said.
Jim Travers, the chairman and CEO of Fleetmatics, said in a statement that the companies "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."
Fleetmatics has more than 37,000 global customers, which covers some 737,000 users, according to the company.
Verizon looks to its recent acquisitions, including the Fleetmatics deal, as moves that will help it bring in new customers and revenue as it works to grow its mobile carrier business operations beyond the traditional smartphone marketplace. By adding Fleetmatics, Verizon could add to its internet of things mobile connections through additional in-vehicle activations, which would bolster revenue.
In July, Verizon announced that it brought in $30.5 billion in revenue in the second quarter of 2016, which was down 5.3 percent from the $32.2 billion the company brought in the same quarter a year prior, according to a recent eWEEK story. The company also reported a GAAP net income attributable to Verizon of $702 million, which was down 83.4 percent from the $4.2 billion posted a year prior ago due to charges for pension and benefits as well as early debt redemption costs. The Q2 revenue was below analysts' estimates of $30.94 billion. Verizon's GAAP earnings per share were 17 cents per share, which were down from $1.04 per share in the same quarter in 2015. Non-GAAP earnings per share were 94 cents per share, before non-operational charges for pensions, benefits and early debt redemption. The company said its financial results were also negatively impacted by about 7 cents per share in second-quarter 2016 by a seven-week strike by wireline employees earlier this spring.
Verizon added about 615,000 retail postpaid mobile customers in the quarter, giving the company a total of 107.8 million retail postpaid customers overall. Together with its 5.4 million retail prepaid mobile customers, the company claims 113 million customers. That's up 3.3 percent from a year ago, when the company had 109.5 million customers. Verizon reported a 0.94 percent churn rate for the quarter for retail postpaid customers, which is up slightly from a rate of 0.90 percent one year ago.
Verizon's wireless unit brought in operating revenue of $21.7 billion in Q2, which was down 4 percent from the $22.6 billion it brought in a year prior. The division's Q2 2016 operating income was $8 billion, up 4.2 percent from $7.7 billion a year ago, while it also added 462,000 4G smartphones to its postpaid base in the quarter.