Here's why the Zoom2u (ASX:Z2U) share price zoomed 26% higher today

The company was zooming today after announcing an acquisition that could position it on the global market.

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The Zoom2U Technologies Ltd (ASX: Z2U) share price lived up to its name today, zooming 26% to a high of 47 cents in early trading. This follows the Australian-owned delivery platform's acquisition of the Local Delivery Shopify App

Zoom2u announced that it has agreed to buy the assets associated with Local Delivery for $880,000. The assets include "all intellectual property … and existing customer relationships of approximately 570 e-commerce businesses in over 45 countries".

Marketed as a same-day delivery company employing local drivers, Zoom2U said this acquisition would allow it to expand its footprint into North America and the United Kingdom. 

At the close of trade, the Zoom2U share price was swapping hands 11.6% higher at 38 cents apiece.

Why is this good news for Zoom2u? 

Zoom2u founder and CEO Steve Orenstein said the purchase aligned with its recent initial public offering (IPO) company prospectus for acquiring software as a service (SaaS) businesses that would provide Zoom2U with new customer bases. 

The acquisition is hoped to push the Locate2u subscription-based software to existing and new local delivery customers, allowing e-commerce businesses to deliver their products in the quickest, most effective ways possible by optimising driving routes, tracking and communicating with drivers, and giving consumers accurate estimations of arrival.

Potential revenue growth is also an upside, Zoom2u says. The Local Delivery App currently brings in an annual recurring revenue (ARR) of around AU$145,000, which it hopes can be further utilised to convert new customers.

Said Orenstein:

The combination of the Local Delivery App and Locate2u will enable Shopify Merchants to provide an end-to-end delivery solution to their customers. The acquisition opens up significant opportunity to grow the Locate2u product globally… 

We will initially deploy limited sales resources to these regions to exploit the data base and prove up our ability to sell into these markets.

The purchase will be possible with cash on hand that was allocated for international growth, the company said.

Investors will be able to attend a webinar to further discuss the matter on Tuesday, 14 December. 

About the Zoom2u share price

The Zoom2U share price hit its second-lowest mark at 34 cents yesterday, challenged only by its low in September after it first listed on the ASX.

On 20 September, it shot up 19% after entering a contract agreement with Telstra Corporation Ltd (ASX: TLS) offering free two-hour delivery of Apple and Samsung handsets to homes in selected areas of Sydney, Melbourne and Brisbane.

At the time of writing, the company has a market capitalisation of more than $44 million.

The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia owns and has recommended Telstra Corporation Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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