FLIR Acquires Lorex

By: John Honovich, Published on Oct 25, 2012

A stunning deal of a truly odd couple: Thermal camera leader FLIR has acquired home/budget surveillance specialist Lorex for $59 million. While not well known, Lorex has quietly become one of the biggest surveillance companies, on pace for ~$75 Million in revenue this year. Not only is this sizeable but the combination is extremely atypical. This deal has the potential to be a huge move for a FLIR or a comedy, I suppose. In this note, we dig into the details and analyze FLIR's plans.

[Note, for background, see the Investor's call transcript which provides extensive details on the plans for this deal.]

Key Drivers

An overarching priority for FLIR is to move thermal downmarket. While the company is a powerhouse in government and critical infrastructure, it remains overwhelmingly an expensive offering for premium customers.

Lorex, on the other hand, has built the opposite business model. A high volume, low cost offering sold through mass market distribution, online and through big box retailers (e.g., Costco).

In the best case scenario, opposites attract and they complement each other perfectly.

To that end, Flir identified 3 key drivers:

  • "Adding thermal imaging to Lorex's emerging Digimerge brand"
  • "A professional security-grade security systems (Digimerge)" that they plan to sell into the professional security market
  • "Addition of FLIR's international distribution to Lorex's strong North American presence"

The last point is strategically the most insignificant. Even if Flir can help sell more Lorex products internationally, it will not have much impact on the market overall. However, the other two are quite significant.

Adding Thermal on the Low End

Flir really wants to expand on the low-end:

Get Video Surveillance News In Your Inbox
Get Video Surveillance News In Your Inbox

"This is right in line with what we've publicly stated as our strategy for a long, long time, introducing active thermal into places like Costco and other direct, if you will, marketing activities that these folks do, has clearly been in our strategy for forever so to speak."

Even today, a 'cheap' Flir thermal camera is $5,000 while a typically Lorex camera is a few hundred, at most.

They see Lorex as a vessel to deliever and distribute thermal into the lower end professional / consumer market:

"What we really see here are the ability to take our technology and insert it into their product line, which we think will be significantly positive both in terms of revenue growth and margin."

The clear plus is that Lorex knows how to move lots of cameras. Flir cites Lorex's annual unit sales at 500,000+ cameras, showing that Lorex can operate at far higher volume scale than Flir who is optimized for small numbers of extremely expensive cameras.

The best comparable we see is DRS Technologies who has stormed the surveillance industry with thermal network cameras that are far less expensive than what anyone else offers, including Flir.

Competing Against Axis, Bosch, Pelco Head On

Even more interestingly, Flir is gearing up to deliver an end to end array of security cameras, not just thermal:

"Many of those customers that we call on today, I think, would be more than happy to be buying a full suite of products from FLIR and not just a thermal camera from FLIR."

To do so, they are targeting Lorex's Digimerge brand:

"The area of focus, I think, an intersection with FLIR will be at the Digimerge side, which is the professional integrator series of product. And that's where our sales organizations, I think, have a convenient overlap, a beneficial overlap on the integration side."

While Digimerge is a 'professional' offering, it is certainly on the lower end of the market. Nonetheless, they are looking to take this to go head to head against the biggest players in the market:

"Today, an integrator might pick a FLIR thermal camera and then combine it together with a Pelco, Axis, Bosch, something like that, enterprise-grade camera. And we feel that we can offer to that integrator an enterprise class of a product that will have a compelling value proposition versus those competitors. And at this point, those aforementioned companies are companies that are starting to compete with us as well in the thermal space. So I think we're more than willing to take on that level of competition."

While Pelco, Axis and Bosch are all incurring into the thermal market, we are skeptical of Flir's ability to return fire in the conventional camera market through Digimerge anytime soon. While Lorex has very innovative products for the home market side, they need extensive development to truly challenge Axis, Bosch and Pelco.

Conclusion

While the strategic plan has risks, the price paid was reasonable. Flir is acquiring Lorex for ~$60 million USD, notably less than Lorex's projected 2012 revenue of ~$75 million USD. And given Flir's ~$3 billion market capitalization, it is a relatively tiny acquisition. However, it is a significant strategic gambit that, if executed, could greatly expand Flir's position in the market or could make them look foolish for such a gambit. Time will tell and this will certainly be an interesting one to watch develop.

10 reports cite this report:

Dahua Acquires Lorex And FLIR SMB Surveillance From FLIR on Feb 06, 2018
Would you buy your own customer? Well, Dahua has just done that. FLIR has sold its Lorex / home / SMB business to Dahua, just over 5 years after...
FLIR Security Business Struggling on Aug 02, 2017
FLIR's security division is an ambitious mix of FLIR's core thermal business plus multiple acquisitions, including of retail / consumer offering...
Manufacturer Revenue / Financials Directory on Jun 05, 2017
This report contains data on the revenue of 32 security manufacturers, trend analysis of whether they are gaining or losing ground and commentary...
FLIR Favorability Results 2016 on Dec 14, 2016
FLIR has been buying companies one after the other, expanding from its foundations in thermal imaging into an end-to-end video surveillance...
FLIR Security Revenue Reviewed on Oct 31, 2016
With acquisitions of Lorex, DVTel and ISD, adding to their core thermal offerings, FLIR has been building up its presence in the security / video...
FLIR Buys Point Grey For $253M on Oct 04, 2016
FLIR's acquisition streak continues, announcing an acquisition of Point Grey Research for $253M in cash. Other notable FLIR deals include: FLIR...
FLIR Acquires DVTel on Nov 30, 2015
Originally a thermal imaging specialist, FLIR is making a major expansion into 'conventional' video surveillance by acquiring DVTel. This is FLIR's...
Infinova Acquires Swann on Oct 21, 2014
3 years ago, a Chinese / US surveillance manufacturer, Infinova, raised $300 million cash in a billion dollar plus IPO. Later that year, they...
Google Acquires Dropcam For $555 Million on Jun 20, 2014
Google, via its Nest Labs subsidiary, has acquired home security specialist Dropcam for $555 million USD. Revenue IPVM estimates Dropcam's 2014...
Winner and Losers of the Milestone Deal on Jun 16, 2014
An industry changing event. Canon's acquisition of Milestone will impact the industry for years to come. But who fared the best and worst from...
Comments : PRO Members only. Login. or Join.

Related Reports

Mining Company Security Manager Interview on May 10, 2019
First Quantum Minerals Limited (FQML) is a global enterprise with offices on 4 continents and operations in 7 countries with exploratory operations...
10 Facial Recognition Providers Review (Secutech) on May 09, 2019
Adding to our 19 Facial Recognition Providers Profiled report from ISC West, IPVM focused on facial recognition technology for our Day 2 coverage...
ADT's Top Dealer "The Defenders" Sued 20+ Times on May 07, 2019
ADT's largest authorized dealer, The Defenders, has been sued more than 20 times since 2012, IPVM has verified through analyzing legal...
Amazon Marketing Pro Installs of Amazon Security Systems on Apr 25, 2019
Is Amazon a threat to conventional providers like ADT, Vivint and Brinks Home Security? Many say no. Now, Amazon is advertising free in-home...
19 Facial Recognition Providers Profiled on Apr 23, 2019
IPVM interviewed 19 facial recognition providers at ISC West to understand their claimed accuracy, success and positioning. 9 from China, where...
Startup iryx Launches, Led by Ex-Arecont and FLIR Executives on Apr 04, 2019
Suddenly, the video surveillance industry is witnessing a new wave of startups. Now launching is iryx, a startup led by veterans of 2 of the...
Camera Disruptor Wyze Enters Sensor / Security Market on Mar 28, 2019
Wyze, the company that has disrupted consumer IP cameras, combining American marketing and Chinese manufacturer, has just announced its expansion...
ADT And 'The Defenders' Silent About Massive Complaints on Feb 14, 2019
ADT's largest dealer, "The Defenders" has been the subject of a massive number of complaints over many years and many forums, most recently a CBS...
FLIR Favorability Results 2019 on Feb 08, 2019
FLIR has had a challenging past few years including FLIR Security business struggling, FLIR restructuring their security division and FLIR selling...
Surging Wyze Raises $20 Million, Threat To Chinese Brands on Feb 01, 2019
The Seattle Startup that is disrupting consumer IP cameras with $20 pricing has just raised $20 million dollars (SEC Filing and company press...

Most Recent Industry Reports

Facial Recognition Systems Fail Simple Liveness Detection Test on May 17, 2019
Facial recognition is being widely promoted as a solution to physical access control but we were able to simply spoof 3 systems because they had no...
Inside Look Into Scam Market Research on May 17, 2019
Scam market research has exploded over the last few years becoming the most commonly cited 'statistics' for most industries, despite there clearly...
Maglock Selection Guide on May 16, 2019
One of the most misunderstood yet valuable pieces of electrified hardware is the maglock. Few locks are stronger, but myths and confusion surround...
Panasonic 32MP Multi Imager Camera Tested (WV-X8570N) on May 16, 2019
Panasonic has released their first multi imager models including the 32MP (4x4K) WV-X8570N, claiming "Extreme image quality for evidence capturing...
Trump Signs 'Huawei Ban' - Executive Order Targeting Foreign Adversary Technology on May 16, 2019
US President Donald Trump has signed an executive order targeting technology provided by 'foreign adversaries', in what is widely being called a...
Bank Security Manager Interview on May 15, 2019
Bank security contends with many significant threats - from fraudsters to robbers and more. In this interview, IPVM spoke with bank security...
Milestone XProtect 2019 R1 Tested on May 15, 2019
For the past few years, Milestone has released quarterly software updates XProtect VMS platform. What is new and how much impact do the updates...
San Francisco Face Recognition Ban And Surveillance Regulation Details Examined on May 14, 2019
San Francisco passed the legislation 8-1 today. While the face recognition 'ban' has already received significant attention over the past few...
Security Fail: ASISNYC Auto Emails Passwords In Plain Text on May 14, 2019
ASIS NYC automatically emails a user with the password the user just entered, in plain text, when one registers for the site / event, as the...
Hikvision VP On Muslim Oppression on May 14, 2019
Hikvision has won tens of millions of dollars, at least, in direct contracts with the Chinese government that oppresses Muslims, including a forced...

The world's leading video surveillance information source, IPVM provides the best reporting, testing and training for 10,000+ members globally. Dedicated to independent and objective information, we uniquely refuse any and all advertisements, sponsorship and consulting from manufacturers.

About | FAQ | Contact