Contact: Scott Denne
eBay’s PayPal subsidiary is paying $800m for payments software provider Braintree Payment Solutions to advance its position in serving software and e-commerce businesses. Through organic growth, Braintree became the payments technology provider of choice for many high-growth e-commerce startups. Cementing its position was an inorganic move meant to help its customers tackle the growing adoption of mobile payments.
Braintree was specifically chosen to bring more software vendors, especially mobile software firms, to eBay’s PayPal business. Braintree specializes in providing payment processing for the newest generation of consumer Internet and SaaS companies. As those companies – such as Airbnb, LivingSocial, Uber and Fab.com – have grown, Braintree has grown with them. And as those companies became more mobile-focused, so too did Braintree, by acquiring mobile-wallet provider Venmo for a reported $26m last year.
Just as it has in its last two major payments purchases – the $240m reach for Zong in 2011 and the $820m pickup of Bill Me Later in 2008 – eBay is paying a mindful price for Braintree. While Braintree’s revenue isn’t disclosed, the company is still small – it processes less than one-tenth of PayPal’s total. Braintree’s platform processed $4bn in payments in 2011, netting the vendor $10m in revenue. Now, it’s on pace to process $12bn in annual payments. Keeping the ratio constant would likely put its revenue in the $30-40m range. If our rough math is correct, the deal would value Braintree at a whopping 20x sales.
For more real-time information on tech M&A, follow us on Twitter @451TechMnA.