AirIQ growing telematics market presence through licensing and acquisitions

AirIQ Inc. made two significant moves this month to deliver on a promise to grow through commercial vertical expansion, build a consumer business and effect an industry consolidation. The Toronto-based telematics provider announced September 14 that it will acquire Boatracs LLC of San Diego CA, and then one day later entered into a private label service licensing agreement with Massachusetts-based LoJack Corp. The Boatracs acquisition is expected to add more than $7 million in revenue to AirIQ’s top line, and more than $1 million in earnings. Don Simmonds, president and CEO of the Toronto-based telematics firm, says that the LoJack Corp. licensing agreement is significant for the consumer business, while the Boatracs LLC acquisition allows AirIQ to not only expand into the commercial marine business, but brings in a specialized shop in-house. He adds that the two deals expand the number of vehicles that can be equipped with AirIQ equipment and services. AirIQ says it has now become a dominant provider in the commercial marine business following its acquisition of Boatracs. "They’ve got a great little business, but has not (been growth oriented) and there we think it’s going to be fun to rejuvenate and bring it along," Simmonds says. The acquisition is the second for AirIQ this summer. It closed the purchase of Aircept.com LLC on June 29 (RoW Update, July 6/04). Simmonds says there are still 10 smaller companies in AirIQ’s acquisition sights, but adds that its strategy isn’t dependent on the acquisition of any of them. He adds that its top two targets were Aircept.com and Boatracs. Acquisitions, says Simmonds, can accelerate the timeframe required to effectively compete in the market. "There’s a certain minimum critical mass that we would like to achieve either through organic growth or through acquisition. We don’t have to acquire all 10, but there’s a certain number of those 10 that if acquired would give us - just call it a certain scale and dominance that is very hard to duplicate. "We have enough technology built and now we’ll advance that technology. It’s time to either acquire additional companies or grow aggressively within our market sectors. But we’d like to be an early entrant and a dominant player in each market that we serve," he tells Report on Wireless. Simmonds says that for the most part these acquisition targets already offer services in the rental vehicle, the trucking industry and the heavy equipment markets, verticals where AirIQ competes as well. He adds that AirIQ isn’t targeting verticals with small vehicle deployments, citing the snowplow market as an example where there are probably fewer than 200,000 vehicles in all of North America. "Our aspiration is to attack what we call large-scale homogenous vertical markets where we have massive numbers of vehicles to attack, so that our technology investment can have as much opportunity as possible," says Simmonds. It’s much easier and less expensive to acquire established operations than it is to break into a new vertical, Simmonds explains. "It probably takes two to three years to be a factor in a vertical in our business, and we’ve said it’s time for us to consolidate some of those companies into our business," he tells RoW. The end goal is profitability, and Simmonds says the company is well on its way to reaching it. While he wouldn’t provide specifics on revenue levels, he states the company will likely see revenue figures about four to fives time what they were at the end of its last fiscal year. Simmonds adds that AirIQ’s top line revenue will triple from the Aircept.com acquisition and the remaining growth will come from the Boatracs and consumer businesses. The Boatracs acquisition brings the total addressable market for AirIQ to 17 million vehicles and gives the company ample room to build on its existing 125,000-strong subscriber base. On the consumer side, LoJack already serves about 5% of all new vehicles sold in North America opening AirIQ to tremendous market opportunity. There are approximately 16 million new vehicles sold in North America each year. Simmonds believes that the company should be able to grow its presence in the consumer business substantially in the future. "Our focus in on equipping the highest possible percentage of new vehicles sold in North America…and we want to acquire as much of that percentage as possible. For example, the LoJack announcement suggests that a number of their installations would come to our solution (and) we might be able to, through our own market efforts, increase the total percentage to 8%, and get 2% to 3% on our own brand," he tells RoW.

AirIQ growing telematics market presence through licensing and acquisitions

News | September 22, 2004

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