Why Fusion Is Absolutely Stunning Investors

Fusion Telecommunications International Inc. (NASDAQ: FSNN) was leading the bulls in Wednesday’s session on news of an acquisition. The company announced that it has acquired Fidelity Voice and Data. Fidelity provides cloud voice, cloud connectivity, security, data center and cloud storage services to approximately 2,000 small, medium and large business customers. Fusion expects to complete the integration of Fidelity by the end of the second quarter of 2016.

Ultimately this acquisition will offer a highly comparable set of cloud solutions and network infrastructure that can be tightly integrated into Fusion’s existing platform.

Total consideration in the transaction, which closed on Wednesday, was $30.0 million, consisting of $28.5 million in cash and $1.5 million in Fusion common stock. The transaction is immediately accretive to Fusion, with substantial opportunity for cost savings through elimination of redundancies.

This contributes a revenue base of roughly $18 million per year, over 90% of which consists of monthly recurring revenues, growing nearly 10% organically through the first nine months of 2015.

Matthew Rosen, CEO of Fusion, said:

The acquisition of Fidelity brings Fusion closer to its goal of building significant scale in the fragmented but rapidly growing cloud services market. Fidelity will also contribute to Fusion’s organic growth, accelerating Fusion’s progress over the last year in expanding its business. We intend to drive additional organic growth by cross-selling and up-selling Fusion’s comprehensive suite of integrated cloud solutions and leveraging the benefits of Fusion’s nation-wide network to Fidelity’s current customer base.

He added:

Fusion adheres to a disciplined acquisition strategy based on a strict set of criteria. Fidelity met each of these criteria, including a business customer base with predictable, contracted recurring revenues, a high ARPU, and low churn, as well as a team of professionals and network assets that can be tightly integrated. We expect to quickly integrate the Fidelity sales and marketing team, its network and back office infrastructure to accelerate the introduction of Fusion’s advanced, proprietary cloud solutions and national footprint to Fidelity’s customers.

Shares of Fusion were last seen trading up nearly 58% at $3.48 Wednesday, with a consensus analyst price target of $6.00 and a 52-week trading range of $1.83 to $5.43.
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