Keynote adds to its mobile monitoring business

Contact: Brenon Daly

Moving to bolster its enterprise mobile monitoring portfolio, Keynote Systems said Monday that it will hand over $60m in cash for testing and quality assurance (QA) startup DeviceAnywhere. (Additionally, terms provide for a potential $30m earnout over the next two years, although Keynote indicated that any payments would likely be back-end loaded.) Keynote will finance the deal, which is expected to close in two weeks, entirely from cash on hand. There were no advisers on either side of the transaction.

DeviceAnywhere is based about five miles from Keynote’s headquarters in San Mateo, California, and will move most of its 119 employees into the building that Keynote owns. The startup had attracted more than 1,200 customers, although about 1,100 of those are developers with the remaining 100 being enterprises. DeviceAnywhere brings testing and QA capabilities for mobile websites and applications to Keynote, which has focused almost exclusively on monitoring. It generated about $20m on a trailing revenue basis.

Taken together, DeviceAnywhere and Keynote’s existing enterprise mobile monitoring unit would generate roughly $26m in revenue – a level that Keynote executives project could quadruple in the coming years. The purchase of DeviceAnywhere is Keynote’s first acquisition since April 2008. Since then, shares of Keynote have basically doubled, compared to a single-digit percentage gain for the Nasdaq over that period. Keynote will discuss the acquisition more fully when it reports fiscal year results on November 3.