*Ellie Mae Acquires CRM Player*
**By Scott Kersnar**
***Thursday afternoon mortgage software provider Ellie Mae, Pleasanton, Calif., announced 3Q 2013 revenues of $33 million, up 20% year over year, despite an estimated 25% decline in the mortgage market during that period. Active Encompass users grew 39% to 93,577 active users, with 9,700 new Encompass seats booked. The company reported adjusted EBITDA of $10.4 million, up from $9.8 million from 3Q 2012. However, the company reported a drop in adjusted net income to $7.1 million, down from $9.5 million in 3Q 2012. The LOS also announced an agreement to acquire a leading CRM firm.
****Despite “impressive growth year over year,” said Ellie Mae CEO Sig Anderman, “it was not as strong as we expected. The decline in mortgage applications in August and September was steeper and more sudden than we expected, and the larger customers we signed earlier in the year took longer to implement than we anticipated.”
****He also reported a loss of revenues when two legacy refi specialists that subscribed to Ellie Mae’s doc prep solution exited the business in the third quarter as the refinance market contracted. “The impact on revenues, combined with our increased investment in R&D, customer support and sales, produced operating results that were lower than we forecasted,” Anderman said. Nevertheless, he said, Ellie Mae is still targeting 25% revenue growth for 2014.
****Ellie Mae also announced having signed a definitive agreement to acquire CRM firm MortgageCEO for an undisclosed cash price, with the deal expected to close by year’s end. Mortgage CEO bills itself as an “all-in-one” CRM and marketing platform, offering lead management, sales automation, referral marketing to real estate agents and builders and unlimited mobile access to leads and contacts. Anderman characterized the acquisition as being “consistent with our mission to automate every aspect of the mortgage process.” He said the acquisition was made substantially in response to customer feedback, as well as the shift in the mortgage market to purchase transactions. The Ellie Mae announcement said MortgageCEO founder and CEO Jaret Christopher and his employees were all expected to remain.
****Anderman cited CRM technology as a valuable tool for compliance with QM and ability-to-pay regulations coming in January 2014. He described the MortgageCEO acquisition as an example of Ellie Mae’s investment for long-term growth.
****“We knew this was going to be a challenging year when we adopted the strategy to build out our organization and invest for long-term growth. Despite the revenue shortfall, we are sticking to that strategy,” he said. “We are intensifying our marketing efforts, reinforcing our implementation and customer support teams and investing in research and development.” He said Ellie would continue to expand its lender support teams and professional services, welcoming tough market conditions as an opportunity to accelerate its lead over competitors. As proof of his company’s standing among mortgage bankers, Anderman noted that Ellie Mae has just received Mortgage Technology’s Lender’s Choice Award, the only Mortgage Technology awards made by vote of the lenders themselves.
Since 1996, when he wrote “NetSuccess: How Real Estate Agents Use the Internet,” Scott Kersnar has been chronicling the development of technology in real estate finance. He is a past editor of Mortgage Technology magazine.