Contact:
Matthew
Besler
Public Relations Manager
+1 224 698 4415 Tel
matthew.besler@experian.com Email
Acquisition
of Hitwise
Costa Mesa, Calif., 19 April 2007 - Experian, the
global information solutions company, announces that it has acquired Hitwise, a
leading Internet marketing intelligence company, which helps clients monitor
the performance of their websites and target their online advertising spend
more effectively. The purchase price is
approximately $240m and will be funded from Experian’s existing cash
resources. The transaction is subject
to regulatory approval.
Don Robert, Chief Executive Officer of Experian,
commented:
“We have been successfully repositioning our
Marketing Solutions business to meet our clients’ needs as they continue to
switch more of their advertising spend online.
Hitwise, which is a rapidly growing, successful business, brings new,
unique data to Experian and complements the existing data, tools and expertise
that we already offer to clients in other areas such as research services and
email distribution.”
Andrew Walsh, Chief Executive Officer of
Hitwise, said:
“Over the last 10 years, Hitwise has developed a
truly unique digital intelligence service that helps inform the online
marketing strategies of 1,200 clients around the world every day. We are excited to become part of Experian,
having worked with them for over four years.
We will now be able to accelerate Hitwise’s growth and profitability
through access to Experian’s wider pool of data, tools and clients, while more
quickly expanding our global footprint.”
Description
of Hitwise
Founded in 1998, Hitwise collects and aggregates
information from Internet Service Providers (ISPs) on how over 25 million
consumers use and search the Internet in the US, UK, Australia and other
countries in Asia Pacific. Using
proprietary technology, Hitwise reports on nearly a million websites each day
and sells this information to companies who market their services online. The data allows companies to benchmark their
websites against competitors in terms of visitor market share, visitor profiles
and time spent on sites. It also helps
companies to determine which are the best websites on which to advertise, which
search engines drive traffic to their sites and which key words are most
effective.
To safeguard consumer privacy, the data excludes personally identifiable
information and is aggregated into socio-demographic marketing segments. Hitwise owns this data once it has been
processed.
Hitwise has over 1,200 clients across numerous
sectors including financial services, media, travel and retail. Hitwise’s clients include HSBC, AXA, Google,
eBay, CBS News, ask.com, IKEA, MTV and Qantas.
The top ten clients only account for 5% of sales. 43% of sales are generated in the US, 36% in
the UK and 21% from Australia and Asia Pacific. Hitwise benefits from clear barriers to entry, reflecting the
scale of its operations, the quality of its data and its long term ISP
relationships.
Rationale
for acquisition
The
acquisition of Hitwise continues the repositioning of Experian’s Marketing
Solutions activities.
Companies are increasingly shifting from mass marketing through
established media, such as direct mail, to more targeted marketing through many
more channels, including email, Internet and mobile devices. Through its expertise in website monitoring,
Hitwise extends the range of marketing services that Experian can offer its
clients.
Hitwise strengthens Experian’s position in
market research by bringing new, unique data to Experian on how consumers
behave online, to complement our existing knowledge of how they behave
offline. Hitwise’s services are also complementary
to other Experian products. For
example, Hitwise will leverage the sales and distribution network of
CheetahMail, our email delivery and analytics company.
Hitwise
operates in high growth markets. It is estimated that total
US online advertising spend, for example, will grow by about 20% CAGR between
2005 and 2010 to $32bn as Internet usage by both consumers and businesses grows
(source: Interactive Advertising Bureau).
This growth in Internet advertising is fuelling demand from companies to
target better their advertising spend (be it for search marketing, local search
or banner advertising) and to measure its effectiveness. Hitwise helps companies achieve both these
objectives.
Hitwise has good organic growth prospects, driven by:
Financial performance
Hitwise
has an attractive financial model. Revenue is highly predictable as clients
generally pay annual licence fees in advance and customer retention rates are
high. Cost growth is also relatively
low once critical mass has been reached in a market, as Hitwise pays for the data
from the ISPs once and then resells it many times.
This
model underpins Hitwise’s expected future growth. In the year to 31 March 2007, Hitwise is
expected to generate sales of approximately $40m (a year-on-year increase of
about 50%) and a small profit. Given
that the visibility of future revenue is high, Experian expects Hitwise to grow
sales by more than 40% in the year to 31 March 2008 and generate EBIT (before
amortisation of acquisition intangibles) of $12-15m. The acquisition is expected to be neutral to Benchmark earnings*
in the year to March 2008 and generate a post-tax double-digit return in the
third full financial year on a fully-taxed basis.
Hitwise, which has been acquired from its
original backers and management, will form part of Experian Marketing
Solutions. Hitwise has over 200
employees based mainly in Melbourne, New York and London. The acquisition is expected to close in May
2007.
Experian announcements are available on www.experiangroup.com
There will be a conference call today at 9am UK
time to discuss this transaction.
Slides accompanying this call can be either downloaded or viewed live in
conjunction with the conference call by visiting www.experiangroup.com. A recording of the call will also be
available later in the day on the website.
All financial information is based on unaudited
management accounts. Certain statements
made in this announcement are forward-looking statements. Such statements are based on current
expectations and are subject to a number of risks and uncertainties that could
cause actual events or results to differ materially from any expected future
events or results referred to in these forward-looking statements.
*Benchmark earnings: earnings before
amortisation of acquisition intangibles, goodwill impairments, changes in
respect of demerger-related equity incentive plans, exceptional items,
financing fair value measurements and taxation.