WireSpring Blog

Signs of Consolidation in the Digital Signage Software Space?

Author: Bill Gerba on 2004-12-29 15:33:22

Back in May, I highlighted PRN, a mature digital signage company who was (and still is, I think) readying for an IPO, in an article called "PRN: A Digital Signage IPO Story."  At the time, it was encouraging to see a company in our industry that was "growing up" and entering the public market.  Since then, things have been delayed a bit, but there's no doubt that as the industry continues to expand, we'll see more of this type of thing.

In fact, I came across this press release a few days ago which notes that Inscriber, another signage software provider, is being acquired by Leitch, a high-def and broadcast video technology company.  While the release suggests that the primary intent of the merger is to consolidate the two companies’ technologies and customer bases in the broadcast video and high definition spaces, I can also envision a scenario where Inscriber’s InfoCaster software could be combined with some of Leitch’s video creation, management and distribution software to create a powerful solution for the digital signage space.  And while signage doesn’t currently appear to be foremost on Leitch’s mind, that could change as the market continues to mature.

One thing that I haven’t been able to figure out about this deal, though, is the numbers... The company is being acquired for $18M, yet is expected to generate $14M annually, of which 60%, or almost $8.5M, is margin.  That means that Leitch basically paid 2x Inscriber’s annual gross margins for the company.  If true, that’s an amazing deal for Leitch, however I have to believe that there’s more than meets the eye here.  I’m looking forward to reading Leitch’s next quarterly statement to see if there is a ready explanation.

Regardless of how this deal turns out for Inscriber or Leitch, we’ll continue to see consolidation and continued growth in the signage market for quite some time to come.  With powerful dynamic digital signage solutions enabling new and creative business models, companies offering digital signage hardware, software and services will continue to pop up to fill some need in the marketplace.

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