Artificial Intelligence
Inuvo Announces Financial Results for the Fourth Quarter and Full Year Ending December 31, 2020
LITTLE ROCK, Ark., Feb. 11, 2021 (GLOBE NEWSWIRE) — Inuvo, Inc. (NYSE American: INUV), a leading provider of marketing technology, today announced its financial results for the fourth quarter and full year ending December 31, 2020.
Richard Howe, CEO of Inuvo, stated, “The IntentKey platform grew year-over-year 34% in the fourth quarter and 22% overall driven by the expansion of existing client relationships and an increase in the total number of campaigns on the platform. While year-over-year revenue was down due to the pandemic, the recovery within ValidClick, where revenue was lost year-over-year, has been strong with December revenue up over 100% from the low in May 2020. We would expect ValidClick to be back too normal in 2021 and the IntentKey to continue its growth trajectory, which combined is expected to result in positive Adjusted EBITDA for 2021.”
Inuvo launched the Software-as-a-Service (SaaS) version of the IntentKey in January of 2021 by packaging the proprietary Artificial Intelligence, Analytic Modeling, and Data Technologies in a manner that allows clients to leverage the core IntentKey engine while complimenting that with their own services. Client beta testing in the fourth quarter of 2020 proved successful in delivering comparable performance to the managed service version of the platform. The launch significantly enhances the market potential for the IntentKey product.
Mr. Howe continued, “Our balance sheet has never been stronger. The additional working capital will allow us to continue focusing on our organic growth while also evaluating acquisition opportunities that can accelerate that growth, with a focus on companies whose client relationships are suited to the software and services of the IntentKey.”
Financial Results for the Fourth Quarter and Full Year Ended December 31, 2020:
Net revenue for the full year ended December 31, 2020 totaled $44.6 million as compared to $61.5 million during the same period the year prior, a decrease of 27.4% year-over-year associated with the ValidClick platform where COVID-19 had a material impact on the business. IntentKey revenue grew 22% year-over-year to $10.4 million in 2020 as compared to $8.5 million in 2019.
Overall revenue in the fourth quarter was $12.9 million, up 40% sequentially. ValidClick revenue was up 48.5% sequentially to $9.3M in the fourth quarter, continuing its recovery following its COVID-19 related low point in the second quarter. IntentKey revenue for the fourth quarter of 2020 totaled $3.6 million, an increase of 34% year-over-year. IntentKey revenue for the fourth quarter of 2020 accounted for 28% of the total revenue.
Cost of revenue for the full year ended December 31, 2020 totaled $8.3 million as compared to $22.7 million during the same period the year prior, a decrease of 63.5%, primarily due to the COVID-19 related decline in ValidClick revenue.
Gross profit totaled $36.3 million for the full year ended December 31, 2020 as compared to $38.8 million for the same period the year prior, a decrease of 6.4%. IntentKey gross profit in 2020 increased 90% year-over-year as a result of growth and margin expansion. ValidClick gross profit in 2020 was down 35% year-over-year as a result of the COVID-19 impact on revenue. Gross profit margins improved to 81.4% for the full year ended December 31, 2020 as compared to 63.1% for the same period the year prior. IntentKey gross profit margins for the fourth quarter of 2020 were 45% compared to 41% in the prior year
Operating expenses decreased 4.7% year-over-year to $44.4 million as compared to $46.6 million for the year ended December 31, 2019.
Net loss for the year ended December 31, 2020 totaled $7.3 million. Net Loss included $4.5 million of non-cash items.
Adjusted EBITDA was a positive $347 thousand in the fourth quarter and a loss of $2.4 million for the full year.
Liquidity and Capital Resources:
At December 31, 2020, Inuvo had $7.9 million in cash, $150,000 in debt and no outstanding balance on its working capital line of $5 million. Subsequent to December 31, 2020, the Company raised an additional $14.25 million from the sale of common stock to institutional investors.
Conference Call Details:
The Company is in the process of finalizing its financial statements and will host a conference call on Thursday, February 11, 2021 at 4:30 p.m. Eastern time to discuss its financial results for the fourth quarter and year ended December 31, 2020 and provide a business update.
Date: Thursday, February 11, 2021
Time: 4:30 p.m. Eastern time
Toll-free Dial-in Number: 1-800-289-0438
International Dial-in Number: 1-323-794-2423
Conference ID: 1881018
Participant Link: http://public.viavid.com/index.php?id=143468
A telephone replay will be available through February 25, 2021. To access the replay, please dial 1-844-512-2921 (domestic) or 1-412-317-6671 (international). At the system prompt, enter the code 1881018 followed by the # sign. You will then be prompted for your name, company and phone number. Playback will then automatically begin.
About the IntentKey™
Inuvo®’s IntentKey™ is a patented, machine-learning technology designed to mirror the manner in which the human brain instantly associates ideas, emotions, places, people, and objects. It creates an accurate, high-definition picture of consumer intent and sentiment related to a particular topic or item. Inuvo harnesses the power of the IntentKey to discover and reach high volumes of incremental in-market and relevant audiences that are hidden from typical marketing approaches. The IntentKey enables pinpoint media execution reaching consumers throughout the purchasing funnel all the way to conversion.
About Inuvo
Inuvo®, Inc. (NYSE American: INUV) is a market leader in artificial intelligence, aligning and delivering consumer-oriented product & brand messaging strategies online based on powerful, anonymous and proprietary consumer intent data for agencies, advertisers and partners. To learn more, visit www.inuvo.com.
Safe Harbor / Forward-Looking Statements
This press release contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially, including, without limitation risks detailed from time to time in our filings with the Securities and Exchange Commission (the “SEC”), and represent our views only as of the date they are made and should not be relied upon as representing our views as of any subsequent date. You are urged to carefully review and consider any cautionary statements and other disclosures, including the statements made under the heading “Risk Factors” in Inuvo, Inc.’s Annual Report on Form 10-K for the fiscal year ended December 31, 2020 as filed on February 11, 2021, our Quarterly Reports on Form 10-Q, and our other filings with the SEC. Additionally, forward looking statements are subject to certain risks, trends, and uncertainties including the continued impact of Covid-19 on Inuvo’s business and operations. Inuvo cannot provide assurances that the assumptions upon which these forward-looking statements are based will prove to have been correct. Should one of these risks materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those expressed or implied in any forward-looking statements, and investors are cautioned not to place undue reliance on these forward-looking statements, which are current only as of this date. Inuvo does not intend to update or revise any forward-looking statements made herein or any other forward-looking statements as a result of new information, future events or otherwise. Inuvo further expressly disclaims any written or oral statements made by a third party regarding the subject matter of this press release. The information, which appears on our websites and our social media platforms is not part of this press release.
Inuvo Company Contact:
Wally Ruiz
Chief Financial Officer
Tel (501) 205-8397
[email protected]
Investor Relations:
KCSA Strategic Communications
Valter Pinto, Managing Director
Tel (212) 896-1254
[email protected]
INUVO, INC. | |||||
CONDENSED CONSOLIDATED BALANCE SHEETS | |||||
December 31 |
December 31, |
||||
2020 |
2019 |
||||
Assets | |||||
Cash | $7,890,665 | $372,989 | |||
Accounts receivable, net | 6,227,610 | 7,529,785 | |||
Prepaid expenses and other current assets | 413,435 | 243,888 | |||
Total current assets | 14,531,710 | 8,146,662 | |||
Property and equipment, net | 1,187,061 | 1,374,152 | |||
Goodwill | 9,853,342 | 9,853,342 | |||
Intangible assets, net | 8,586,089 | 10,451,593 | |||
Other assets | 1,023,369 | 865,178 | |||
Total other assets | 19,462,800 | 21,170,114 | |||
Total assets | $35,181,571 | $30,690,928 | |||
Liabilities and Stockholders’ Equity | |||||
Accrued expenses and other current liabilities | $4,680,912 | $4,057,340 | |||
Accounts payable | 4,048,260 | 7,520,567 | |||
Financed receivables | – | 3,381,364 | |||
Convertible promissory notes (net) | – | 536,806 | |||
Derivative liability | – | 182,250 | |||
Total current liabilities | 8,729,172 | 15,678,327 | |||
Deferred tax liability | 107,000 | 107,000 | |||
Other long-term liabilities | 1,052,285 | 452,051 | |||
Total long-term liabilities | 1,163,285 | 559,051 | |||
Total stockholders’ equity | 25,289,114 | 14,453,550 | |||
Total liabilities and stockholders’ equity | $35,181,571 | $30,690,928 | |||
INUVO, INC. | |||||||||||||||||||
CONSOLIDATED STATEMENTS OF OPERATIONS | |||||||||||||||||||
Three Months Ended | Twelve Months Ended | ||||||||||||||||||
December 31 |
December 31 |
December 31 |
December 31 |
||||||||||||||||
2020 | 2019 | 2020 | 2019 | ||||||||||||||||
Net revenue | $12,902,487 | $18,222,984 | $44,640,007 | $61,525,214 | |||||||||||||||
Cost of revenue | 2,141,562 | 5,390,377 | 8,296,483 | 22,700,873 | |||||||||||||||
Gross profit | 10,760,925 | 12,832,607 | 36,343,524 | 38,824,341 | |||||||||||||||
Operating expenses | |||||||||||||||||||
Marketing costs | 8,261,359 | 10,122,874 | 27,410,284 | 30,135,991 | |||||||||||||||
Compensation | 2,425,592 | 2,023,231 | 9,350,831 | 7,753,528 | |||||||||||||||
Selling, general and administrative | 1,920,769 | 2,000,900 | 7,630,990 | 8,673,015 | |||||||||||||||
Total operating expenses | 12,607,720 | 14,147,005 | 44,392,105 | 46,562,534 | |||||||||||||||
Operating loss | (1,846,795) | (1,314,398) | (8,048,581) | (7,738,193) | |||||||||||||||
Interest expense (income), net | (2,170) | 29,348 | (253,505) | (482,210) | |||||||||||||||
Other income , net | 1,134,000 | 92,035 | 997,517 | 3,397,902 | |||||||||||||||
Net loss before taxes | (714,965) | (1,193,015) | (7,304,569) | (4,822,501) | |||||||||||||||
Income tax benefit | – | 334,394 | – | 334,394 | |||||||||||||||
Net loss | (714,965) | (858,621) | (7,304,569) | (4,488,107) | |||||||||||||||
Earnings per share, basic and diluted | |||||||||||||||||||
Net loss income | ($0.01) | ($0.02) | ($0.09) | ($0.11) | |||||||||||||||
Weighted average shares outstanding | |||||||||||||||||||
Basic | 97,629,735 | 50,450,199 | 77,473,479 | 40,454,779 | |||||||||||||||
Diluted | 97,629,735 | 50,450,199 | 77,473,479 | 40,454,779 | |||||||||||||||
RECONCILIATION OF LOSS FROM CONTINUING OPERATIONS BEFORE TAXES TO ADJUSTED EBITDA | |||||||||||
(unaudited) | |||||||||||
Three Months Ended | Twelve Months Ended | ||||||||||
December 31 |
December 31 | December 31 |
December 31 | ||||||||
2020 | 2019 | 2020 | 2019 | ||||||||
Operating loss | ($1,846,795) | ($1,314,398) | ($8,048,581) | ($7,738,193) | |||||||
Depreciation | 318,623 | 394,019 | 1,372,426 | 1,680,105 | |||||||
Amortization | 542,827 | 598,299 | 2,233,485 | 1,742,280 | |||||||
EBITDA | (985,345) | (322,080) | (4,442,670) | (4,315,808) | |||||||
Stock-based compensation | 198,068 | 195,284 | 858,683 | 789,914 | |||||||
Non-recurring items: | |||||||||||
PPP Loan Forgiven | 1,109,000 | – | 1,109,000 | – | |||||||
Third party rights agreement | 24,999 | – | 78,762 | – | |||||||
Merger costs incurred during the Terminated Merger | – | 991,158 | |||||||||
Net adjustment to derivative liability accounts | – | (447,678) | (286,473) | ||||||||
Adjusted EBITDA | $346,722 | ($574,474) | ($2,396,225) | ($2,821,209) | |||||||
Reconciliation of Loss from Continuing Operations before Taxes to EBITDA and Adjusted EBITDA
We present EBITDA and Adjusted EBITDA as a supplemental measure of our performance. We defined EBITDA as net loss from continuing operations before taxes plus (i) interest expense, net, (ii) depreciation, and (iii) amortization. We further define Adjusted EBITDA as EBITDA plus (iv) stock-based compensation and (v) certain identified expenses that are not expected to recur or be representative of future ongoing operation of the business. These adjustments are itemized above. You are encouraged to evaluate these adjustments and the reasons we consider them appropriate for supplemental analysis. In evaluating EBITDA and Adjusted EBITDA, you should be aware that in the future we may incur expenses that are the same or similar to some of the adjustments in the presentation. Our presentation of EBITDA and Adjusted EBITDA should not be construed as an inference that our future results will be unaffected by unusual or non-recurring items
Artificial Intelligence
Building Energy Management Systems Market Projected to Reach $67.69 billion by 2030 – Exclusive Report by 360iResearch
PUNE, India, April 24, 2024 /PRNewswire/ — The report titled “Building Energy Management Systems Market by Component (Hardware, Services, Software), Type (Integrated Building Energy Management Systems, Standalone Building Energy Management Systems), Application, Deployment Mode, End-Use – Global Forecast 2024-2030” is now available on 360iResearch.com’s offering, presents an analysis indicating that the market projected to grow from a size of $34.52 billion in 2023 to reach $67.69 billion by 2030, at a CAGR of 10.09% over the forecast period.
“Revolutionizing Energy Efficiency Globally With The Evolution of Building Energy Management Systems (BEMS)”
In an era where energy conservation and efficiency have become paramount, building energy management systems (BEMS) are at the forefront of this transformation, offering solutions that monitor, control, and optimize energy usage within buildings. These advanced systems, leveraging real-time data analytics, automate energy control, enhance energy savings, reduce costs, and contribute to a greener planet. Primarily utilized in commercial spaces, residential areas, and industrial sectors, BEMS has a broad application scope, covering HVAC, lighting, and security systems. Factors driving the expansion of the BEMS market include escalating energy expenses, heightened awareness of environmental impacts, and the increasing incorporation of Internet of Things (IoT) and cloud-based technologies, coupled with supportive government initiatives promoting energy-efficient infrastructures. Although challenges such as high initial costs and technology integration barriers exist, the advent of AI and IoT technologies within BEMS heralds a future of predictive energy management and remote operational capabilities, with a growing emphasis on integrating renewable energy sources. Regions such as the United States, Canada, the European Union, and emerging economies such as China and India are witnessing significant growth in BEMS adoption, spurred by regulatory policies and a shift towards sustainable building practices. This global movement toward BEMS signals a step toward reducing carbon footprints and highlights the collective effort to embrace technology for a sustainable future.
Download Sample Report @ https://www.360iresearch.com/library/intelligence/building-energy-management-systems
“Harnessing Energy Management for Sustainability and Efficiency”
Data centers are pivotal infrastructures in the digital transformation era, consuming up to 50 times more energy than typical commercial spaces. This energy demand positions data centers as key contributors to the U.S.’s overall electricity consumption. Recognizing this, implementing building energy management systems (BEMS) is crucial in mitigating the environmental impact and operational costs associated with data centers. BEMS optimizes cooling systems to prevent equipment overheating, thereby enhancing energy efficiency by leveraging real-time data. Such systems reduce the power usage effectiveness (PUE) ratio, highlighting a move toward more sustainable consumption patterns and ensuring data centers’ operational continuity. Integrating seamlessly with existing infrastructure, BEMS offers a comprehensive approach to energy management, enabling more innovative cooling, efficient power usage, and predictive maintenance. This transition highlights a commitment to environmental responsibility and fosters operational efficiency, setting a new standard for data center operations worldwide.
“Revolutionizing Building Efficiency With Advanced Energy Management Systems Optimized Usage”
In push toward sustainability, building energy management systems (BEMS) stands at the forefront of innovation, integrating sophisticated hardware such as sensors, actuators, controllers, and more to manage and reduce energy consumption in buildings meticulously. These systems work in concert to monitor environmental conditions and adjust heating, ventilation, and air conditioning (HVAC) settings in real time, leading to significant energy savings. BEMS provides valuable data that helps identify savings opportunities, while networking tools ensure seamless communication between devices by precisely tracking energy flow through meters. Servers process vast amounts of data, enabling detailed analysis and actionable insights to refine energy use further. Additionally, comprehensive services, including customized consultations and dedicated support, ensure that each BEMS is tailored to a building’s unique needs, providing efficient operation and extended system longevity. BEMS exemplifies the strategic shift toward more sustainable and operationally excellent building management through the collaborative synergy of hardware, software, and expert services.
Request Analyst Support @ https://www.360iresearch.com/library/intelligence/building-energy-management-systems
“Schneider Electric SE at the Forefront of Building Energy Management Systems Market with a Strong 13.97% Market Share”
The key players in the Building Energy Management Systems Market include Schneider Electric SE, Honeywell International Inc., Azbil Corporation, Emerson Electric Co., Johnson Controls International PLC, and others. These prominent players focus on strategies such as expansions, acquisitions, joint ventures, and developing new products to strengthen their market positions.
“Introducing ThinkMi: Revolutionizing Market Intelligence with AI-Powered Insights for the Building Energy Management Systems Market”
We proudly unveil ThinkMi, a cutting-edge AI product designed to transform how businesses interact with the Building Energy Management Systems Market. ThinkMi stands out as your premier market intelligence partner, delivering unparalleled insights with the power of artificial intelligence. Whether deciphering market trends or offering actionable intelligence, ThinkMi is engineered to provide precise, relevant answers to your most critical business questions. This revolutionary tool is more than just an information source; it’s a strategic asset that empowers your decision-making with up-to-the-minute data, ensuring you stay ahead in the fiercely competitive Building Energy Management Systems Market. Embrace the future of market analysis with ThinkMi, where informed decisions lead to remarkable growth.
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“Dive into the Building Energy Management Systems Market Landscape: Explore 180 Pages of Insights, 566 Tables, and 26 Figures”
PrefaceResearch MethodologyExecutive SummaryMarket OverviewMarket InsightsBuilding Energy Management Systems Market, by ComponentBuilding Energy Management Systems Market, by TypeBuilding Energy Management Systems Market, by ApplicationBuilding Energy Management Systems Market, by Deployment ModeBuilding Energy Management Systems Market, by End-UseAmericas Building Energy Management Systems MarketAsia-Pacific Building Energy Management Systems MarketEurope, Middle East & Africa Building Energy Management Systems MarketCompetitive LandscapeCompetitive PortfolioInquire Before Buying @ https://www.360iresearch.com/library/intelligence/building-energy-management-systems
Related Reports:
Home Energy Management System Market – Global Forecast 2024-2030Energy Management System Market – Global Forecast 2024-2030Intelligent Building Automation Technologies Market – Global Forecast 2024-2030About 360iResearch
Founded in 2017, 360iResearch is a market research and business consulting company headquartered in India, with clients and focus markets spanning the globe.
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Our clientele encompasses about 80% of the Fortune Global 500, and leading consulting and research companies and academic institutions that rely on our expertise in compiling data in niche markets. Our meta-insights are intelligent, impactful and infinite, and translate into actionable data that support your quest for enhanced profitability, tapping into niche markets, and exploring new revenue opportunities.
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Artificial Intelligence
Terra Drone, Unifly, and Aloft Launch UTM Development for AAM Targeting Global Markets
TOKYO, April 25, 2024 /PRNewswire/ — Terra Drone Corporation, a leading drone and Advanced Air Mobility (AAM) technology provider headquartered in Japan, announced today the launch of joint development with its Group companies Unifly NV (“Unifly”) and Aloft Technologies Inc. (“Aloft”) focused on UAS Traffic Management (UTM) for AAMs targeting global markets. Terra Drone has been making strides in its pioneering UTM business via strategic investments in Unifly, a leading UTM technology provider based in Belgium, and Aloft, which has the top UTM market share in the U.S. This collaboration marks the world’s first-ever joint UTM development for AAMs by multiple companies with extensive track records in UTM implementation and operation.
The three companies pursue joint UTM development to capitalize on the rapid global progress in electric vertical take-off and landing aircrafts (eVTOLs), set to revolutionize transportation. Morgan Stanley forecasts the Urban Air Mobility (UAM) market to reach $1 trillion by 2040 and $9 trillion by 2050 (1), with eVTOLs gaining global recognition through test flights and prototype showcases.
The companies proudly announce initiatives to enhance their existing UTM platforms in anticipation of the surge in eVTOL aircraft and drone activities. The shared vision for the UTM platform is to enable safe and efficient flight operations for eVTOLs and drones in the foreseeable future.
Recognizing the evolving needs of the AAM industry, they are dedicated to extending their platform by incorporating crucial additional functions. These enhancements, designed with automation at their core, aim to streamline operational efficiencies and pave the way for the integration of their increasingly automated UTM technology into the design and operational framework of AAMs. Through these efforts, they aim to set new standards in UTM and to facilitate the seamless integration of eVTOLs and drones into the national airspace, bolstering the potential for the AAM industry.
Through this initiative, they aim to build a global UTM infrastructure that kickstarts the AAM industry worldwide, creating a cohesive ecosystem that supports AAM growth and addresses broader challenges of urban mobility, sustainability, and air traffic safety.
Notes to Editor:
Research by Morgan Stanley in a report titled “eVTOL/Urban Air Mobility TAM Update: A Slow Take-Off, But Sky’s the Limit” https://advisor.morganstanley.com/the-busot-group/documents/field/b/bu/busot-group/Electric%20Vehicles.pdf]
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Artificial Intelligence
IBM to Acquire HashiCorp, Inc. Creating a Comprehensive End-to-End Hybrid Cloud Platform
$6.4 billion acquisition adds suite of leading hybrid and multi-cloud lifecycle management products to help clients grappling with today’s AI-driven application growth and complexity
HashiCorp’s capabilities to drive significant synergies across multiple strategic growth areas for IBM, including Red Hat, watsonx, data security, IT automation and Consulting
As a part of IBM, HashiCorp is expected to accelerate innovation and enhance its go-to-market, growth and monetization initiatives
Transaction expected to be accretive to Adjusted EBITDA within the first full year, post close, and free cash flow in year two
ARMONK, N.Y. and SAN FRANCISCO, April 24, 2024 /PRNewswire/ — IBM (NYSE: IBM) and HashiCorp Inc. (NASDAQ: HCP), a leading multi-cloud infrastructure automation company, today announced they have entered into a definitive agreement under which IBM will acquire HashiCorp for $35 per share in cash, representing an enterprise value of $6.4 billion. HashiCorp’s suite of products provides enterprises with extensive Infrastructure Lifecycle Management and Security Lifecycle Management capabilities to enable organizations to automate their hybrid and multi-cloud environments. Today’s announcement is a continuation of IBM’s deep focus and investment in hybrid cloud and AI, the two most transformational technologies for clients today.
“Enterprise clients are wrestling with an unprecedented expansion in infrastructure and applications across public and private clouds, as well as on-prem environments. The global excitement surrounding generative AI has exacerbated these challenges and CIOs and developers are up against dramatic complexity in their tech strategies,” said Arvind Krishna, IBM chairman and chief executive officer. “HashiCorp has a proven track record of enabling clients to manage the complexity of today’s infrastructure and application sprawl. Combining IBM’s portfolio and expertise with HashiCorp’s capabilities and talent will create a comprehensive hybrid cloud platform designed for the AI era.”
The rise of cloud-native workloads and associated applications is driving a radical expansion in the number of cloud workloads enterprises are managing. In addition, generative AI deployment continues to grow alongside traditional workloads. As a result, developers are working with increasingly heterogeneous, dynamic, and complex infrastructure strategies. This represents a massive challenge for technology professionals.
HashiCorp’s capabilities enable enterprises to use automation to deliver lifecycle management for infrastructure and security, providing a system of record for the critical workflows needed for hybrid and multi-cloud environments. HashiCorp’s Terraform is the industry standard for infrastructure provisioning in these environments. HashiCorp’s offerings help clients take a cloud-agnostic, and highly interoperable approach to multi-cloud management, and complement IBM’s commitment to industry collaboration (including deep and expanding partnerships with hyperscale cloud service providers), developer communities, and open-source hybrid cloud and AI innovation.
“Our strategy at its core is about enabling companies to innovate in the cloud, while providing a consistent approach to managing cloud at scale. The need for effective management and automation is critical with the rise of multi-cloud and hybrid cloud, which is being accelerated by today’s AI revolution,” said Armon Dadgar, HashiCorp co-founder and chief technology officer. “I’m incredibly excited by today’s news and to be joining IBM to accelerate HashiCorp’s mission and expand access to our products to an even broader set of developers and enterprises.”
“Today is an exciting day for our dedicated teams across the world as well as the developer communities we serve,” said Dave McJannet, HashiCorp chief executive officer. “IBM’s leadership in hybrid cloud along with its rich history of innovation, make it the ideal home for HashiCorp as we enter the next phase of our growth journey. I’m proud of the work we’ve done as a standalone company, I am excited to be able to help our customers further, and I look forward to the future of HashiCorp as part of IBM.”
Transaction Rationale
Strong Strategic Fit – The acquisition of HashiCorp by IBM creates a comprehensive end-to-end hybrid cloud platform built for AI-driven complexity. The combination of each company’s portfolio and talent will deliver clients extensive application, infrastructure and security lifecycle management capabilitiesAccelerates growth in key focus areas – Upon close, HashiCorp is expected to drive significant synergies for IBM, including across multiple strategic growth areas like Red Hat, watsonx, data security, IT automation and Consulting. For example, the powerful combination of Red Hat’s Ansible Automation Platform’s configuration management and Terraform’s automation will simplify provisioning and configuration of applications across hybrid cloud environments. The two companies also anticipate an acceleration of HashiCorp’s growth initiatives by leveraging IBM’s world-class go-to-market strategy, scale, and reach, operating in more than 175 countries across the globeExpands Total Addressable Market (TAM) – The acquisition will create the opportunity to deliver more comprehensive hybrid and multi-cloud offerings to enterprise clients. HashiCorp’s offerings, combined with IBM and Red Hat, will give clients a platform to automate the deployment and orchestration of workloads across evolving infrastructure including hyperscale cloud service providers, private clouds and on-prem environments. This will enhance IBM’s ability to address the total cloud opportunity, which according to IDC had a TAM of $1.1 trillion in 2023, with a compound annual growth rate in the high teens through 2027.1Attractive Financial Opportunity – The transaction will accelerate IBM’s growth profile over time driven by go-to-market and product synergies. This growth combined with operating efficiencies, is expected to achieve substantial near-term margin expansion for the acquired business. It is anticipated that the transaction will be accretive to Adjusted EBITDA within the first full year, post close, and free cash flow in year two.HashiCorp boasts a roster of more than 4,400 clients, including Bloomberg, Comcast, Deutsche Bank, GitHub, J.P Morgan Chase, Starbucks and Vodafone. HashiCorp’s offerings have widescale adoption in the developer community and are used by 85% of the Fortune 500. Their community products across infrastructure and security were downloaded more than 500 million times in HashiCorp’s FY2024 and include:
Terraform – provides organizations with a single workflow to provision their cloud, private datacenter, and SaaS infrastructure and continuously manage infrastructure throughout its lifecycleVault – provides organizations with identity-based security to automatically authenticate and authorize access to secrets and other sensitive dataAdditional products – Boundary for secure remote access; Consul for service-based networking; Nomad for workload orchestration; Packer for building and managing images as code; and Waypoint internal developer platformTransaction Details
Under the terms of the agreement, IBM will acquire HashiCorp for $35 per share in cash, or $6.4 billion enterprise value, net of cash. HashiCorp will be acquired with available cash on hand.
The boards of directors of IBM and HashiCorp have both approved the transaction. The acquisition is subject to approval by HashiCorp shareholders, regulatory approvals and other customary closing conditions.
The Company’s largest shareholders and investors, who collectively hold approximately 43% of the voting power of HashiCorp’s outstanding common stock, entered into a voting agreement with IBM pursuant to which each has agreed to vote all of their common shares in favor of the transaction and against any alternative transactions.
The transaction is expected to close by the end of 2024.
____________________1 The total cloud opportunity is the sum of the cloud-directed spends across Hardware, IT services and SW for Private and Public cloud implementation, sourced from IDC’s Worldwide Black Book Live Edition, March 2024 (V1 2024)
Conference Call Details
IBM’s regular quarterly earnings conference call is scheduled to begin at 5:00 p.m. ET, today. The Webcast may be accessed here. Presentation charts will be available shortly before the Webcast.
About IBM
IBM is a leading provider of global hybrid cloud and AI, and consulting expertise. We help clients in more than 175 countries capitalize on insights from their data, streamline business processes, reduce costs and gain the competitive edge in their industries. Thousands of government and corporate entities in critical infrastructure areas such as financial services, telecommunications and healthcare rely on IBM’s hybrid cloud platform and Red Hat OpenShift to affect their digital transformations quickly, efficiently and securely. IBM’s breakthrough innovations in AI, quantum computing, industry-specific cloud solutions and consulting deliver open and flexible options to our clients. All of this is backed by IBM’s legendary commitment to trust, transparency, responsibility, inclusivity and service. Visit www.ibm.com for more information.
About HashiCorp
HashiCorp is The Infrastructure Cloud™ company, helping organizations automate multi-cloud and hybrid environments with Infrastructure Lifecycle Management and Security Lifecycle Management. HashiCorp offers The Infrastructure Cloud on the HashiCorp Cloud Platform (HCP) for managed cloud services, as well as self-hosted enterprise offerings and community source-available products. The company is headquartered in San Francisco, California. For more information, visit HashiCorp.com.
Press Contacts:
IBM:Tim Davidson, [email protected]
HashiCorp:Matthew Sherman / Jed Repko / Haley Salas / Joycelyn BarnettJoele Frank, Wilkinson Brimmer Katcher212-355-4449
Additional Information and Where to Find It
HashiCorp, Inc. (“HashiCorp”), the members of HashiCorp’s board of directors and certain of HashiCorp’s executive officers are participants in the solicitation of proxies from stockholders in connection with the pending acquisition of HashiCorp (the “Transaction”). HashiCorp plans to file a proxy statement (the “Transaction Proxy Statement”) with the Securities and Exchange Commission (the “SEC”) in connection with the solicitation of proxies to approve the Transaction. David McJannet, Armon Dadgar, Susan St. Ledger, Todd Ford, David Henshall, Glenn Solomon and Sigal Zarmi, all of whom are members of HashiCorp’s board of directors, and Navam Welihinda, HashiCorp’s chief financial officer, are participants in HashiCorp’s solicitation. Information regarding such participants, including their direct or indirect interests, by security holdings or otherwise, will be included in the Transaction Proxy Statement and other relevant documents to be filed with the SEC in connection with the Transaction. Additional information about such participants is available under the captions “Board of Directors and Corporate Governance,” “Executive Officers” and “Security Ownership of Certain Beneficial Owners and Management” in HashiCorp’s definitive proxy statement in connection with its 2023 Annual Meeting of Stockholders (the “2023 Proxy Statement”), which was filed with the SEC on May 17, 2023 (and is available at https://www.sec.gov/ix?doc=/Archives/edgar/data/1720671/000114036123025250/ny20008192x1_def14a.htm). To the extent that holdings of HashiCorp’s securities have changed since the amounts printed in the 2023 Proxy Statement, such changes have been or will be reflected on Statements of Change in Ownership on Form 4 filed with the SEC (which are available at https://www.sec.gov/cgi-bin/browse-edgar?action=getcompany&CIK=0001720671&type=&dateb=&owner=only&count=40&search_text=). Information regarding HashiCorp’s transactions with related persons is set forth under the caption “Related Person Transactions” in the 2023 Proxy Statement. Certain illustrative information regarding the payments to that may be owed, and the circumstances in which they may be owed, to HashiCorp’s named executive officers in a change of control of HashiCorp is set forth under the caption “Executive Compensation—Potential Payments upon Termination or Change in Control” in the 2023 Proxy Statement. With respect to Ms. St. Ledger, certain of such illustrative information is contained in the Current Report on Form 8-K filed with the SEC on June 7, 2023 (and is available at https://www.sec.gov/ix?doc=/Archives/edgar/data/1720671/000162828023021270/hcp-20230607.htm). Promptly after filing the definitive Transaction Proxy Statement with the SEC, HashiCorp will mail the definitive Transaction Proxy Statement and a WHITE proxy card to each stockholder entitled to vote at the special meeting to consider the Transaction. STOCKHOLDERS ARE URGED TO READ THE TRANSACTION PROXY STATEMENT (INCLUDING ANY AMENDMENTS OR SUPPLEMENTS THERETO) AND ANY OTHER RELEVANT DOCUMENTS THAT HASHICORP WILL FILE WITH THE SEC WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION. Stockholders may obtain, free of charge, the preliminary and definitive versions of the Transaction Proxy Statement, any amendments or supplements thereto, and any other relevant documents filed by HashiCorp with the SEC in connection with the Transaction at the SEC’s website (http://www.sec.gov). Copies of HashiCorp’s definitive Transaction Proxy Statement, any amendments or supplements thereto, and any other relevant documents filed by HashiCorp with the SEC in connection with the Transaction will also be available, free of charge, at HashiCorp’s investor relations website (https://ir.hashicorp.com/), or by emailing HashiCorp’s investor relations department ([email protected]).
Forward-Looking Statements
Certain statements contained in this communication may be characterized as forward-looking under the Private Securities Litigation Reform Act of 1995. These statements involve a number of risks, uncertainties and other factors that could cause actual results to differ materially.
Statements in this communication regarding IBM and HashiCorp that are forward-looking may include statements regarding: (i) the Transaction; (ii) the expected timing of the closing of the Transaction; (iii) considerations taken into account in approving and entering into the Transaction; (iv) the anticipated benefits to, or impact of, the Transaction on IBM’s and HashiCorp’s businesses; and (v) expectations for IBM and HashiCorp following the closing of the Transaction. There can be no assurance that the Transaction will be consummated.
Risks and uncertainties that could cause actual results to differ materially from those indicated in the forward-looking statements, in addition to those identified above, include: (i) the possibility that the conditions to the closing of the Transaction are not satisfied, including the risk that required approvals from HashiCorp’s stockholders for the Transaction or required regulatory approvals to consummate the Transaction are not obtained, on a timely basis or at all; (ii) the occurrence of any event, change or other circumstance that could give rise to a right to terminate the Transaction, including in circumstances requiring HashiCorp to pay a termination fee; (iii) possible disruption related to the Transaction to IBM’s and HashiCorp’s current plans, operations and business relationships, including through the loss of customers and employees; (iv) the amount of the costs, fees, expenses and other charges incurred by IBM and HashiCorp related to the Transaction; (v) the risk that IBM’s or HashiCorp’s stock price may fluctuate during the pendency of the Transaction and may decline if the Transaction is not completed; (vi) the diversion of IBM and HashiCorp management’s time and attention from ongoing business operations and opportunities; (vii) the response of competitors and other market participants to the Transaction; (viii) potential litigation relating to the Transaction; (ix) uncertainty as to timing of completion of the Transaction and the ability of each party to consummate the Transaction; and (x) other risks and uncertainties detailed in the periodic reports that IBM and HashiCorp filed with the SEC, including IBM’s and HashiCorp’s respective Annual Reports on Form 10-K. All forward-looking statements in this communication are based on information available to IBM and HashiCorp as of the date of this communication, and, except as required by law, IBM and HashiCorp do not assume any obligation to update the forward-looking statements provided to reflect events that occur or circumstances that exist after the date on which they were made.
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