Contact: Mark Fontecchio
PTC continues to build its Internet of Things platform, paying $100m for data analytics provider ColdLight Solutions. Traditionally known for CAD and PLM software, PTC has now spent nearly $400m since late 2013 on three deals to jumpstart and grow its IoT business, according to 451 Research’s M&A KnowledgeBase.
The play here will be for PTC to position the flagship ColdLight data and analytics platform (currently branded Neuron) capabilities across the majority of its current technology stack, including SLM and PLM, but most importantly within its IoT business unit. IoT investments only pay off if the data generated by these systems can be translated into valuable business insights. ColdLight will bring those capabilities to the entire PTC stack, which will further strengthen the amount of value it can create for its customers.
PTC’s IoT business went from zero to $19m in the past six months, compared with the same period last year. That contrasts to the rest of PTC’s segments – CAD, PLM and SLM – which dropped 5% to $620m in that same period. Still, IoT generates just 3% of the company’s revenue, so incorporating its growth into PTC’s core portfolio is crucial to its total topline.
ColdLight posts about $2m in revenue per quarter, so the $100m deal values the business well beyond 10x trailing revenue – a much higher multiple than the 1.8x median multiple on IoT transactions, according to the KnowledgeBase. That’s probably an unfair comparison seeing as many IoT deals are in the semiconductor and hardware space, where multiples tend to be lower. A better comp would be Hitachi’s reach for Pentaho in February. While that purchase was considerably bigger (see our estimate here), the TTM revenue multiple was about the same, and the rationale was similar – buying a data analytics software firm to provide IoT capabilities for the acquirer’s core business.
PTC’s IoT deals
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Source: 451 Research’s M&A KnowledgeBase
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