CalAmp has acquired Synovia Solutions from a private investment firm for $50 million as the Irvine, Calif.-based telematics hardware provider continues to expand into subscription services.
Synovia is a leading provider of telematics to school districts, state governments, and local municipalities with solutions in more than 125,000 vehicles. The company's "Here Comes the Bus" mobile app has been downloaded more than 1 million times.
CalAmp acquired the company from Fontinalis Partners, a technology-focused investment firm co-founded by Bill Ford.
"Hardware is becoming more and more commoditized," said Clem Driscoll, a telematics analyst who produces the U.S. Mobile Resource Management Systems Market Study. "So the margins on hardware are pretty thin. CalAmp is trying to build up its services business because it's more profitable."
In 2018, the Synovia recorded $28 million in recurring software revenue with double-digit growth and approximately 30% EBITDA. The acquisition is expected to boost CalAmp's quarterly recurring service revenue to more than $30 million by the second half of the current fiscal year.
"This acquisition brings high-value, low-churn subscribers that are expected to bolster our recurring revenue from software and services to more than 30% of consolidated revenue and expands our market reach within municipalities to accelerate our leadership in the global connected vehicle economy," said Michael Burdiek, CalAmp's president and CEO. "We anticipate meaningful savings in the cost of goods sold and see outstanding product synergies between Synovia's fleet management portfolio and our LoJack SureDrive connected car service as well as CalAmp's broader portfolio of enterprise SaaS applications."
CalAmp has supplied hardware to Synovia since 2013, including tracking devices.
"It will allow us to better serve our current customers and scale the businesses," said Synovia CEO Jon King said about the move. "Synovia has doubled the size of our business in the past few years and this acquisition will allow us to further accelerate our growth and provide greater value to customers while providing stellar customer service that builds on our Fleet Advisors and Synsurance programs."
CalAmp has acquired several other vehicle service providers in recent years. Earlier this year, CalAmp acquired Car Track in Mexico and Tracker in the United Kingdom for $26 million. The companies were the licensed LoJack dealers for those markets.
In March 2016, CalAmp acquired LoJack, which sells vehicle security technology through franchise dealers. In 2013, CalAmp acquired Wireless Matrix for $52.9 million and Radio Satellite Integrators for $6.5 million. CalAmp is a public company with shares that trade on Nasdaq.