Ellie Mae buys Del Mar Datatrac for $25.2 million cash

Ellie Mae (ELLI) purchased Del Mar Datatrac for $25.2 million cash, as it continues using proceeds from its initial public offering to expand. The company said Del Mar’s origination software is used by more than 200 mortgage lenders, who are expected to fund about 500,000 home loans this year. Jonathan Corr, Ellie Mae chief strategy officer, said the acquisition boosts the company’s loan volume in 2011 to 1.5 million from 1 million projected earlier. Pleasanton, Calif.-based Ellie Mae said the acquisition may add up to 20,000 new users to its network, and the the customer base of the combined company has the potential to originate about 30% of all residential mortgages in the country this year. Ellie Mae, which went public in April, previously expected adjusted income of $4.4 million to $5.4 million or 21 cents to 26 cents a share. “Del Mar’s roster of customers includes some of the biggest and most respected lenders in the country. With this acquisition nearly a third of all residential mortgages originated in the United States will be able to flow through Ellie Mae’s systems,” according to Sig Anderman, CEO and president of Ellie Mae. Del Mar President Rob Katz said it takes significant resources to meet client demands for loan quality, compliance and efficiency in today’s mortgage market. “Bigger is indeed better,” Katz said. “As our industry has evolved over the past several years, with independent mortgage bankers, banks and credit unions gaining greater market share, and with more demands being placed on them by regulators and investors, technology vendors have been called upon to provide ever more sophisticated solutions to address those challenges.” Corr said the down market provided Ellie Mae with an opportune time to use the currency from its IPO to add more users to its network while adding other products and services. Katz will stay on as executive vice president, product strategy and Jeb Spencer, chairman of Del Mar, joined Ellie Mae’s board. Del Mar will remain based in San Diego. Ellie Mae expects significant integration costs and lower revenue from the acquisition due to purchase accounting rules. Consequently, the company lowered its adjusted net income estimate for 2011 to between $1.2 million and $2.2 million or 6 cents to 11 cents a share. Write to Jason Philyaw. Follow him at Twitter: @jrphilyaw