Why Ellie Mae Inc (NYSE: ELLI) stock is trading subdued

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Ellie Mae Inc (NYSE: ELLI) stock fell over 0.1% on Feb 15th, 2019 (as of 9:53 am GMT-5; Source: Google finance) after the company posted mixed results for the fourth quarter of FY 18. Net income for the fourth quarter of 2018 was $0.1 million, as compared to $9.9 million, for the fourth quarter of 2017. Net income for the fourth quarter of 2018 includes the amortization of acquisition-related intangibles related to the Velocify acquisition and one-time costs related to a reorganization of the technology group.

ELLI in the fourth quarter of FY 18 has reported the adjusted earnings per share of 27 cents, missing the analysts’ estimates for the adjusted earnings per share of 36 cents. The company had reported the adjusted revenue of $116 million in the fourth quarter of FY 18, beating the analysts’ estimates for revenue of $114 million.

Meanwhile, ELLI stock soared recently after the company agreed to be acquired by private-equity firm Thoma Bravo in a deal with an equity value of about $3.7 billion. Under the terms of the agreement, Thoma Bravo will pay Ellie Mae shareholders $99 in cash per share, equal to a 47% premium over the 30-day average closing share price and 49 percent premium to the 60-day average closing price as of February 1, 2019. Ellie Mae will remain headquartered in Pleasanton, California. The deal is expected to close in the second or third quarter. The agreement includes a 35 day “go-shop” period, under which Ellie Mae can seek superior bids.

On the other hand, ELLI has launched a new major release of Ellie Mae’s Encompass Digital Lending Platform. The latest release will help lenders of all sizes originate more loans, lower origination costs and shorten the time to close with compliance, efficiency and quality. Key highlights include expanded HELOC origination support, the addition of Americans with Disability Act (ADA) capabilities within Consumer Connect and Correspondent and Wholesale Lending enhancements. Further, Ellie Mae has added a new HELOC calculator to Encompass designed to enable Loan Officers to identify the maximum draw amount and credit limit. In addition, to help lenders sell HELOC loans on the secondary market faster, Ellie Mae has added the ability to view all HELOC details within a lock request transaction and a Lock Request Form that seamlessly integrates with the Encompass Product & Pricing Service HELOC programs. The Encompass Digital Lending Platform 19.1 release also includes significant enhancements to TPO Connect, Ellie Mae’s broker and correspondent seller portal solutions. It also includes enhanced trade management purchase advice workflows to help correspondent investors acquire loans faster.

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