reports
Update: Focus shifts towards driving organic performance
With the acquisition of the remaining 50% of Identifix for $620m, Solera’s phase of accelerated M&A to build a digital platform should be drawing to a close. With the key building blocks now in place, the near term focus will now be on building the business organically while reducing gearing.
Update: Building a digital platform
Solera’s transition from a supplier of repair estimation solutions to a diversified provider of risk and asset management solutions is proving expensive. However, the impact of this investment is starting to become more apparent, as revenues diversify and with organic revenue growth expected to tick up in Q4. The conversion of Digital Garage opportunities should provide reassurance on the strategy and potentially drive further enhancement to the organic growth rate.
Update: Changing shape
Through acquisition and investment, Solera is progressively transforming itself from an automotive damage repair estimation company into a broad-based provider of digital solutions for the insurance, claims processing and repair industries. Delivery on the Mission 2020 target now looks very achievable, although investment will continue to weigh on margins and cash conversion in the transition. However, we believe the current operations are worth $65+per share. If Solera delivers on its Mission 2...
Outlook: Platforms for growth
Solera’s investment in Mission 2020 has stepped up of late with the acquisitions of the SRS stake and I&S substantially expanding the company’s platform for growth and cross-selling. Meanwhile, organic revenue growth has ticked up to 5.6% in Q4 and we believe that this level should be sustainable as investment in growth and higher-growth acquisitions contribute to the mix.
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