Outerwall, automated kiosk operator that operates Redbox Coinstar machines and, EcoATM, took a step into e-commerce with the acquisition Gazelle.com – online site that buys and sells used consumer electronics products, including smartphones, tablets, desktop and laptop computers. The company announced the deal in its latest earnings, noting that Outerwall agreed to buy “certain assets and liabilities» Gazelle.com for $ 18 million in cash.
The transaction, which is subject to certain adjustments to take account of net reserves at closing is expected to close in the fourth quarter.
Gazelle.com, as you may already know, it has become a popular destination for those who want to buy a certified pre-owned device or to get cash for their used electronics. Established in 2008 on the site, the site offers an easy online trade service that gives consumers instant quotes their devices and free shipping. Gazelle helpfully sends a box for you to pack your item to make the process of selling the device even easier.
The company in the past years have been particularly been able to benefit from the influx of used iPhones that have hit the market after the launch of new models. For example, in September this year, Gazel promised consumers would beat the credit trade in the proposed wireless client, making an offer to buy the old iPhone 5S, 6 and 6 iPhones Plus. But now, Apple came in at the same place as the Gazelle, program trading and that will allow consumers to bring to Android phones, and other devices without Apple.
Gazelle this fall said that paid more than $ 200 million and bought and resold more than 2 million units to date.
Outerwall, meanwhile, beat profit target on Wall Street for the second consecutive quarter in Q3, but again missed out on sales at the time of the announcement of the acquisition of Gazelle.
Part of the problem lies in the fact Redbox business of the company, which is reduced as consumers shift their viewing online movie rental services like Netflix and Amazon Prime Instant Video. At this point, Outerwall trying to increase profits by moving Redbox kiosks around or in areas that do not have one nearby, or in places that see a lot of consumer traffic.
Redbox, however, accounted for 77.2 percent of revenue Outerwall in Q3, with Outerwall in ransom business Coinstar coin is 16.7 per cent and other income based EcoATM, Outerwall business acquired in 2013, after a preliminary investment.
EcoATM, which are not yet profitable, has the greatest overlap with the Gazelle, and its business is self-service kiosks where consumers can sell used smartphones and other electronics for cash. Outerwall then generates revenue by selling these devices to third parties. It is also testing kiosk concept called SAMPLEit, which involves sampling of the product.
It makes sense then that Outerwall to see Gazelle as a way to potentially expand the money for the electronics business by adding e-commerce arm.
EcoATM brought $ 31 million in revenue in the 3rd quarter – the highest ever quarterly profit – but not where Outerwall wants to be on each kiosk. With assets of Gazelle, Outerwall believes that it can speed up EcoATM to profitability.
On its earnings call, CEO Eric Outerwall Prusch further said that he would Gazelle “include EcoATM, to get a critical mass, provide the opportunity to raise profit margins and use direct-to-consumer channel for the collected devices.”
“We are delighted and we look forward to updating you on the combination after closing the transaction and integration of assets,” said Prusch.
Later, he added that what Outerwall considered attractive on the Gazelle was its direct to consumer model, the fact that they would bring in a critical mass for Outerwall, and raising the margin potential in terms of business EcoATM.
Gazelle online and physical EcoATM with stalls, CEO said. “Thus, we believe that the combination of the two gives us a great breadth in the market give us great depth in terms of critical mass,” he said. “Now we are not even going to comment on the profile of cash out of the business, but we believe it is a good buy, and that is very complementary to each other that we have.”
Gazelle, which is headquartered in Boston and has operation facilities in Kentucky, has about 100 employees. The company could not talk about the details of the acquisition, we are told, because many of the implementation details still being finalized.
Gazelle raised nearly $ 56 million from investors, including Venrock Associates, Rockport Capital Partners and Physic Ventures, among others, according to CrunchBase. The company achieved $ 100 million in revenue in 2013, he reported. Selling for $ 18 million, it seems a little low – subtext that business has been faced with rising sales of
Outerwall, when reached for comment, will only offer the following statement regarding the acquisition of
October 29, 2015 Outerwall, Inc., announced that the company entered into a definitive agreement to acquire Gazelles, Inc., the nation’s leading consumer electronics reCommerce company. The acquisition combines the best of automated and online reCommerce, providing greater consumer choice, value and convenience for buying, selling and recycling of used devices. As with any purchase, many implementation details are still being finalized. We have nothing more to share at this time.