Somoto, offering software distribution solutions and applications, targeted advertising and monetization for Apple Mac, Android, iPhone (iOS) and PC-Windows environments, announced the acquisition of Israeli digital advertising network TerserTude Ltd., specializing in video advertising solutions; video for mobile constitutes 65% of its activity.
TerserTude was established in 2014 and has about 10 active clients and partnerships with dozens of advertising agencies and digital exchanges. TerserTude’s revenue for the first ten months of 2015 amounted to NIS 11.8 million, with an operating profit of NIS 2.5 million (22% of revenue). In Somoto’s estimate, TerserTude’s revenue in the fourth quarter of 2015 is expected to be approximately NIS 9 million, with an operating margin of approximately 23% of revenue.
The total consideration for the transaction, subject to various milestones, is up to NIS 14 million in cash and shares (approximately US$3.6 million), out of which the amount depends on the net profit of TerserTude in 2016, representing approximately 75% of the total consideration of the transaction. On the closing date, a total of approximately NIS 2.1 million in cash will be paid, and TerserTude will become a fully-owned (100%) subsidiary of Somoto. A total of up to approximately NIS 940 thousand in cash, contingent on TerserTude’s results of 2015, will be paid to the existing shareholders of TerserTude in March 2016.
The remainder of the payment of up to approximately NIS 10.8 million, in Somoto shares and cash, subject to milestones (the Earn Out) and based adhering to net income of NIS 10 million during the Earn Out period, beginning November 2015 is expected to be completed at the end of 2016. Additionally, under the framework of the agreement, Somoto will provide TerserTude, upon completion of the transaction, a loan in the amount of NIS 2.61 million.
Ben Garrun, CEO of Somoto (pictured top left), said: “The field of video advertising, especially video on mobile is currently experiencing a significant transition of advertising budgets from television to the Internet. The Terser acquisition is consistent with the growth strategy of Somoto in the mobile field, where we see a significant growth engine, in particular in the field of video, along with our return to growth in the field of Apple Mac and our increasing profitability. The technology and unique knowledge of Terser brings impressive levels of revenue and profitability, and established strong relationships with advertisers and quality advertising space providers, which we believe have the potential for further significant growth. I congratulate the employees of Terser in joining our group. Their experience and knowledge, combined with our capabilities and marketing technologies, will be the basis of Somoto’s capabilities in the area of mobile video. ”
Mr. Garrun added, “We continue to diversify the sources of our revenue and growth areas, so that in 2016, about 50 percent of Somoto’s consolidated revenues will come from the mobile video space, through implementing our strategic plan in expanding through mergers and acquisitions.”
TerserTude was founded by a group of Israeli entrepreneurs and today is managed by Jonathan Barkan, CEO who brings extensive operational experience to Terser. Terser’s employees will engage key positions in Somoto in the field of mobile and video, and will contribute their knowledge and experience to continue the strategic expansion of Somoto in this area.
About Somoto Ltd.
Somoto was founded in 2009 and is engaged in the marketing, distribution, development and automatic intelligent installation (Smart Installer) applications from advertisers, various monetization solutions and solutions for tracking and reporting for applications installation for the personal computer (PC) on Windows, Mac and mobile devices (mobile) environments, using advanced technology developed by the company. The company operates through a large number of publishers and distributes thousands of different applications, including the management of installations of tens of millions of applications a month. The company has agreements for distribution of applications in diverse fields with dozens of active clients, including various alternative customers.
The company develops, through its subsidiary Genio Innovation Ltd., personalization technologies that allow effective Internet advertising through maximum exposure to the user and precise adjustment of products and services by taste and specialized solutions for distribution and monetization for the Mac environment. The company’s flagship product, Smart Homepage has won Innovation Awards, and is a news page with custom content based on user preferences employing unique artificial intelligence technology, and is patent protected in the United States. The company generates revenues through users’ search queries, as well as through the homepage and smart advertising on this page.
Prior to the transaction, the Group has 40 employees, including 22 employees engaged in development.