Video Analytic Vendor Keeneo Acquired

In August 2011, French video analytic vendor Keeneo was acquired by UK security provider Digital Barriers [link no longer available]. In this note, we examine the details of the deal, the financial positioning of both companies and why this is another sign of the poor performance of the video analytics market.

Let's start by reviewing some basics of Keeneo:

• Keeneo [link no longer available] is a 6 year old company with a few dozen employees and a few dozen customers [link no longer available], primarily in France.
• The company offers server based video analytic software targeted at criticial infrastructure / physical security applications. Their analytics are licensed on a per camera basis at approximately ~$1,000 - $1,250 MSRP.
• Keeneo does not sell smart cameras nor encoders. 
• Keeneo reports integration with a number of 3rd party VMS systems [link no longer available] including Milestone.
• Best comparison to a US company would be Vidient though Keeneo likely raised significantly less than the $30+ Million that Vidient did.
• In 2010, Keeneo reported revenue of €1.02 Million (~$1.4 Million USD) with a loss before interest and tax of €0.47 million. By contrast, in 2009, Keeneo's revenue was €0.55 million ($750,000) with a loss of €0.70 million.

It appears that Keeneo's net acquisition price is fairly low in the complex terms Digital Barriers set. While a potential payout of €6.5 Million by 2014 exists, only €2.0 million will initially be paid and that will be "payable to the vendors of Keeneo." Out of that initial €2.0 million, 20% will be Digital Barriers shares and the rest will be cash.

Digital Barriers raised £55.0 million and are in the midst of rolling up various security technology companies to create an end to end security technology provider for high end clients (ICX [link no longer available], now a division of FLIR, is a good example of the approach). However, what is strange / different about Digital Barriers is how low their revenue is - for 2010, revenue was only £6.6 million (~$10.7 Million USD). Digital Barriers is a fairly small company itself with very aggresive / risky plans for expansion. See Digital Barrier's 2010 Annual report [link no longer available] for more details.

Analyzing the Deal's Impact

Here are our key takeaways:

• Low Revenue - Unsurprisingly, Keeneo's revenue was rather low - under $1.5 Million USD. Somewhat surprising was the extent of their loss (over $500,000). That said, such numbers are in range from other private analytic companies we are tracking.
• Low Acquisition Price - While it is hard to determine how much Keeneo's founders and investors received from this deal, we suspect the net amount is fairly low and the operational targets will be challenging to hit.
• No Name Acquirer - Not surprisingly, the company acquiring Keeno is a relatively unknown, unestablished firm. We do not see much demand from large defense contractors / technology developers (similar to the Vidient auction).

While Keeno was relatively unknown in the Americas, we suspect their technology and market success (or lack thereof) is fairly typically of the dozens of small analytic providers [link no longer available] around the world.