Pegasystems tunes into mobile apps with Antenna buy

Contact: Scott Denne Carl Lehmann

Pegasystems has scooped up Antenna Software, a mobile application development vendor that has struggled to compete with the plethora of free and cheap tools for building mobile apps. Launched 15 years ago, Antenna provides software for building, running and managing mobile apps. The business model was to sell the development tools and provide runtime services for free. As the mobile app economy exploded, the company found it increasingly difficult to sell proprietary tools to developers. We estimate that Antenna had less than $40m in sales last year, slightly down from a year earlier.

The deal provides Pegasystems with native mobile development capabilities and several new features, including an enterprise app store and device management. That enables Pegasystems to expand its market to mobile-first customers and gives it a better framework to expand its existing customers into mobile. We view this as an opportunistic acquisition by Pegasystems, which has now only done three deals in the past decade even as its core BPM sector has seen a lot of M&A – both for consolidation and into adjacent markets.

Morgan Stanley advised Antenna and Bridge Street Advisors banked Pegasystems. Incidentally, those same banks played the same roles in Pegasystems’ last deal, its $162m acquisition of CRM vendor Chordiant in March 2010. In that purchase, Pegasystems paid slightly more than 2x trailing sales. (That’s based on equity value for Chordiant, which had slightly more than $50m of net cash.) Although Pegasystems didn’t release terms of its Antenna buy, we would estimate the multiple in the same sort of range as Chordiant’s valuation.

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