The long-awaited integration of Verizon Communications Inc.’s telematics unit, which featured a key acquisition in Orange County, is complete.
The launch of Verizon Connect took more than a year as the parent rolled up Aliso Viejo-based Telogis Inc. and Fleetmatics Group PLC in Illinois, an in-house network and workforce management software applications.
“This was a marathon,” Chief Marketing Officer Jay Jaffin told the Business Journal.
All in, Verizon spent more than six years and $5 billion to build the Atlanta-based unit, likely the largest telematics service provider in the country.
“We saw the potential to really create a powerhouse with capabilities unmatched by anyone else,” Jaffin said.
Telematics is a catch-all term for devices and technology that merge telecommunications and informatics, or information processing, covering a wide swath of applications, including GPS, navigation and fleet tracking systems. The most common commercial applications involve vehicle telematics, tracking and analyzing information on vehicle location, performance, and condition, among others.
Verizon bought Telogis in June 2016 for about $900 million, and Fleetmatics for about $2.4 billion six weeks later. Both were considered industry leaders. Telogis fetched almost eight times its sales, and publicly traded Fleetmatics commanded a 40% premium in an all-cash deal—fair prices, if not a bit generous—market analysts and Internet of Things industry watchers said at the time.
Telogis targeted original-equipment and auto manufactures in the enterprise segment; Fleetmatics primarily served small and medium-sized businesses.
Telogis uses GPS technology and proprietary software to help operators of commercial fleets create better routes, track shipments and deliveries, manage mobile workforces, and improve work flows.
Verizon Connect targets consumers with its HUM by Verizon products, which essentially turn vehicles into connected smart cars through an app, speakers and Wi-Fi hotspot devices.
“We now service all segments,” Jaffin said.
The combined operations employ about 3,500.
Verizon isn’t required to break out financials of the new business unit in quarterly reports, though it may in the future as the unit becomes a bigger part of the overall business. However, in its fourth-quarter and 2017 results, the company reported telematics revenues in the fourth quarter were $230 million (without comparison), and IoT revenues were $359 million, an increase of 7.8%.
“As the market matures and business matures, it probably makes sense to report some metrics,” Jaffin said.
The Telogis sale, which included the exits of Chief Executive Dave Cozzens and Chief Financial Officer Kyle Messman, was considered a potential boon for its OC operation, considering the financial muscle and resources behind New York-based parent Verizon Communications, which posted revenue of $126 billion last year and net income of $30.1 billion.
“I think it bodes well for our presence in Orange County,” Telogis co-founder Newth Morris told the Business Journal in late 2016 after the sale. “I think it will play well over the long term for the region.”
That projection has yet to materialize. Morris, the Business Journal’s inaugural Innovator of the Year award winner in 2015 and the 2016 Business Person of the Year, left Verizon Connect in January.
The Telogis brand is also gone and signage on its Aliso Viejo headquarters at 20 Enterprise will soon be replaced with Verizon Connect.
But Koch plans to stay on, with a focus on innovation and scaling the business, as the new unit builds global distribution and investment.
“I think it’s promising for our global operation as well as local,” he said.
Verizon Connect said it employed about 150 in OC, the same number Telogis employed when it was acquired. Telogis maintains large research and development centers in New Zealand and Dublin, Ireland, and has a big presence in the U.K.
Before its sale, Telogis was growing the top line fast, with sales eclipsing $118 million in the 12 months through June 2016. Its 46.5% revenue jump over the prior two years placed the software maker at No. 13 among the fastest-growing private companies in OC in 2016.
Its trajectory, coupled with the evolving telematics industry—cluttered with new, well-backed influential players, such as Tesla and Google—left Telogis with few options to scale and compete on the global stage.
The company, established in 2001, carved out a lucrative niche by starting partnerships with leading auto brands and influential investors and pushing innovation in one of the hottest areas in technology: connected vehicles.
Telogis forged partnerships with Apple Inc. and AT&T Inc.
It also had fleet management agreements with Ford, General Motors, Isuzu, Volvo Group’s North American trucks unit and Manitowoc Cranes.
A venture capital funding round in May 2015 took Telogis past $120 million in outside investment.
Backers included Kleiner Perkins Caufield & Byers; GM Ventures, the venture capital arm of General Motors; and Fontinalis Partners LLC, co-founded by William Clay Ford Jr., executive chairman of Ford Motor Co. and son of the Detroit Lions owner.
The latest developments come as global tech giants, such as Apple, Amazon and AT&T, aim to corral as many consumers into their own ecosystems, providing everything from multimedia content and groceries to home security services and phone plans.
“We always want to stay one step ahead of everyone,” Jaffin said.
