Combining two experts in cloud-based security solutions with leading position in Entertainment

Fully financed transaction with strengthened capital base at completion

AIX-EN-PROVENCE, France — (BUSINESS WIRE) — December 5, 2018 — The combination accelerates Inside Secure’s strategic roadmap offering an improved value proposition for its shareholders who will benefit from:

• Leading the entertainment security market with a unique value proposition
• Bringing end-to-end security solutions to the IoT and Connected cars markets
• Deploying Verimatrix data analytics capabilities across all Inside Secure end markets
• Scaling to a new business dimension with $119 million of adjusted revenue¹ and $21.5 million of EBITDA¹ (2017 pro forma IFRS²)
• Ready to capture opportunities to up-sell and cross-sell customers while benefiting from economies of scale estimated at $10 million
• Acquisition expected to be accretive³ to Inside Secure’s earnings from 2019 prior to full implementation of anticipated synergies
• 2021 objective to drive profitable growth: revenue of $150 million and EBITDA margin of 25%

A fully financed transaction

• All-cash transaction consideration of approximately $143 million at closing (including assumption of $18 million estimated net cash) and an estimated contingent earn-out of $9 million payable in Q2 2019
• Transaction fully funded through a combination of available cash (approximately $38 million), a private debt ($54 million) provided by Apera Capital, and equity (EUR 52 million, approximately $60 million)
• Transaction expected to close in the first quarter of 2019, subject to vote of Inside Secure’s shareholders on the equity financing and customary conditions precedent

A new cornerstone investor

• One Equity Partners - a private equity firm focused on technology – will participate in the equity financing with a view to support future development and strategy

Inside Secure (Paris: INSD), at the heart of security solutions for mobile and connected devices, today announced it has entered into an exclusivity agreement to acquire Verimatrix, Inc. (“Verimatrix”), a privately-held company headquartered in San Diego, California, USA.

Verimatrix which employs more than 300 people in 20 countries, with most significant operations in California and in Germany, is a global independent leading software security provider for video services, trusted by all major content owners in Entertainment. Their security solutions are recognized for comprehensive multi-network support and maintaining end-to-end service integrity. Verimatrix helps to reduce the cost and complexity in the current content delivery processes. The company extends its technical innovation for video providers by offering a comprehensive data collection and analysis platform for automated real-time quality of experience (QoE) optimization that drives security performance monitoring, user engagement and content monetization.

Verimatrix generated mid-single digit growth to $78.7 million revenue⁴ and $14.5 million EBITDA⁴ in the twelve-month period ended September 30, 2018.

Commenting on the proposed transaction, Amedeo D'Angelo, Chairman and CEO of Inside Secure, said: "Over the years, we have built a unique position to bring security at the heart of connected devices and apps with a leading position in the OTT video services market.
Verimatrix has become a key player in software-based security for Entertainment content management through its scalable and comprehensive platform with a deep expertise in cloud-based data analytics and intelligence on security performance and video users’ behaviours.
In this context, I’m very pleased to move ahead with the project to acquire Verimatrix which is the perfect fit to strengthen scale and reach of our value proposition in end markets that are fast shifting towards software and cloud-based security solutions while video content consumption is becoming multi-device and multi-format.
We are looking forward to combining both businesses to offer our clients the best value proposition in security, starting with entertainment and moving towards Internet of Things and Connected Cars, and to continue to create value for our shareholders.”

Tom Munro, CEO of Verimatrix, Inc., declared: "This transaction allows a great combination of technologies and expertise, bringing two well-respected market players together. It's exciting to create a company with such a clear focus, a global presence, and a depth of expertise in the applications of security and analytics across critical market segments."