Datacard Group to Acquire ID Management Specialist Entrust

By Ashley Willis

MINNEAPOLIS— Datacard Group has agreed to purchase Entrust, a provider of identity management and authentication software, from Thoma Bravo LLC, to meet increased demand for security as more business operations go digital.

Entrust will become a wholly-owned subsidiary of Datacard Group. The transaction will allow the combined companies to enable its government agency and financial institution customers to issue more than 10 million physical identities daily. Clients will have the capability to handle more than 200 billion transactions a year and manage billions of identities, including the majority of payment cards and identification solutions in more than 100 countries.

Started in 1969, Datacard provides secure identification and card personalization solutions to financial institutions, government agencies and other enterprises in more than 150 countries. Examples of the solutions include machines to print, emboss and package credit cards, passports and driver’s licenses. In order to comply with customer demand for safe online and mobile transactions, many of the firm’s clientele urged Datacard to offer digital technology solutions.

The request prompted Datacard, which had increased internal investments in technology to grow organically, to acquire a company to help accelerate its efforts, Datacard President and CEO Todd Wilkinson said in a press conference on Tuesday.

“We identified a few companies in the ecosystem that best met our goals and our first and only choice was Entrust,” he explained. “Entrust not only brought established leadership in the areas of identity and security that we were targeting, but capabilities in cloud, mobile and professional services that aligned with our broader roadmaps, thus accelerating multiple initiatives within our business.”

In 1994, Entrust built the first commercially available public-key infrastructure (PKI) to help end users manage keys and certificates that enable encryption and digital signatures. Since going private in 2009, the Dallas-based company has transformed into a Software as a Service (SaaS) business and has organically increased revenues from $91 million to approximately $120 million in 2013. Entrust has also increased SaaS and subscription revenues to nearly 70% of the company’s total revenue with customer renewal rates at more than 95%.

For former Entrust CFO Dave Wagner, who will now serve as president of the new subsidiary, the deal comes at the right time, as Entrust had goals of expanding its services globally, but didn’t exactly have the proper resources.

“We completed the first leg of a successful transformation to a SaaS company, but to reach our full potential, we needed to be part of a larger organization with a better international reach and longer term investment,” he said during the conference call.

Both Wilkinson and Wagner believe the deal works well because the companies have a shared vision in strengthening identity and transaction security, while making solutions easier for customers to use. Additionally, the two firms serve the same government and financial institution clients, which should help the transition run smoothly.

“At Datacard our two biggest customers are financial and government and they represent more than 70% of our revenue. At Entrust, it’s a similar percentage, but a greater portion of it coming from government,” Wilkinson said. “Our solution is a common core that focuses on financial transactions, business services and enterprise security. With expertise in both physical and digital secure identity, we’re highly complementary.”

The combined companies will have a majority of more than $600 million revenues coming from recurring sources, Wilkinson added, as well as portfolio that will be balanced between hardware, software, supplies and services.

Executives at the two firms plan to accelerate investments in personalization, identity and credentialing solutions. These include Secure Issuance Anywhere technologies from centrally managed bureaus to instant issuance and mobile environments; authentication and credential management offerings that support a wide array of form factors, such as payment cards and identity documents, certificates, mobile, and tokens; and delivery models ranging from on-premise to cloud. Wilkinson said the solutions will further enhance support of third-party payment, identification, benefit, proofing and device management systems to streamline connectivity into today’s more integrated environments.

The combined entity will employ nearly 2,000 professionals, leveraging hundreds of channel partners to serve tens of thousands of customers. Former Entrust President and CEO Bill Conner will serve as a consultant during the transition.

The transaction is expected to close on Dec. 31, and is subject to customary closing conditions.

Ashley Willis is associate editor for SECURITY SALES & INTEGRATION magazine. She can be reached at [email protected]

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