Category: cloud computing

Rackspace acquires freshly launched ObjectRocket

Contact: Tejas Venkatesh

Rackspace has acquired MongoDB hosting specialist ObjectRocket, expanding its portfolio of database services to non-relational data. The move adds a NoSQL cloud database offering, and should improve Rackspace’s ability to compete with Amazon Web Services.

ObjectRocket launched January 15, just 42 days ago. The company had only raised a round of seed funding from an undisclosed set of investors. ObjectRocket’s cofounder and chief architect Kenny Gorman is one of only 35 MongoDB contributors and community members considered MongoDB Masters.

ObjectRocket is differentiated by a managed services approach, advanced features and focus on high performance. The deal is a natural fit for Rackspace, which already offers MySQL-based Cloud Databases for relational applications. Bringing ObjectRocket onboard adds the ability to support non-relational operational applications, for which MongoDB is emerging as the primary NoSQL database of choice. We’ll have a full report on the transaction in our next Daily 451.

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Marketo looks to the market

Brenon Daly

Contact: Brenon Daly

Looking to join a recent run of well-received marketing automation IPOs, Marketo said Tuesday that it has filed its prospectus. Like most other recent would-be debutants, Marketo took advantage of regulatory changes and has filed its paperwork confidentially. Somewhat unusually, however, it did note its IPO filing on its website.

Although Marketo didn’t reveal its financials, we understand that the company has doubled revenue in each of the past three years: $14m in 2010, $30m in 2011 and about $55m in 2012. Marketo has raised some $107m from five different VC firms since 2006.

Last summer, rumors were swirling that Oracle might be looking to acquire Marketo. Instead, the acquisitive software giant reached for Eloqua, paying almost $1bn for that marketing automation vendor. (Meanwhile, we hear that other large enterprise software companies – notably, SAP, Intuit and salesforce.com – continue to sniff around the marketing automation market.)

Assuming Marketo goes ahead with its offering, it will join ExactTarget and Eloqua as IPOs from the sector. (Although, as noted, Eloqua got snapped up just four months after its offering.) As one indication of Wall Street’s bullish view on marketing automation, consider that ExactTarget trades at $1.5bn value on sales of about $300m.

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Informatica’s shy M&A

Ben Kolada

Contact: Ben Kolada

Those merely glancing at the headlines of Informatica’s press releases would see that on Wednesday the company unveiled the latest version of its cloud-integration PaaS product, Cloud Spring 2013. However, only by reading further would an interested party see that the company has also quietly acquired cloud process automation vendor Active Endpoints. This isn’t the first time Informatica has been shy with its M&A announcements, but recent financial results could give the company the confidence to be much louder with its future acquisitions.

Informatica’s previous small tuck-in of Data Scout only came to light with the launch of Informatica Cloud MDM in September 2012 and the subsequent release of Informatica Cloud Winter 2013. Perhaps that deal didn’t deserve significant attention, as it cost Informatica just $6m.

In fact, with the exception of Heiler Software, Informatica’s dealmaking since 2011 has involved mostly small, sub-$10m tuck-ins. Its median deal size from the beginning of 2011 to today (including Heiler Software) is just $7m. That compares with a median deal size of $55m for the 11 transactions it announced before then.

The turn toward smaller acquisitions, and hiding some of them in product announcements, could be explained to a degree by the unfolding economy in Europe. Europe’s struggling economy eventually hit home and weighed heavily on Informatica’s Q3 2012 profit.

Although Europe is still experiencing economic turmoil, Informatica seems to have been able to cushion the continent’s effect on its top line. After a downturn in profit in the third quarter, the company recently released results that showed better-than-expected revenue in the fourth quarter. (However, net income still came in below the year-ago period.) If future results continue to play to Informatica’s favor, we could see the company becoming more boisterous with its M&A announcements in the future. We’ll have a longer report on Informatica’s acquisition of Active Endpoints in our next Daily 451.

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IPO drought lifts, as Marin Software and Model N reveal their paperwork

Brenon Daly

by Brenon Daly

Both Marin Software and Model N revealed their IPO paperwork Wednesday evening, setting the pair up to be the first new technology companies to come to market since mid-November. Both planned offerings have a $75m cover raise, and given the new regulations around IPOs, won’t actually hit the market until mid-March at the earliest. But at least the end to the recent IPO drought is (apparently) near.

Although they share the same filing date, the two companies are very different. Model N sells revenue management software, primarily to the life sciences industry although it has also expanded to tech vendors recently. Model N, which is almost twice as old as Marin Software, sells both perpetual licenses and a subscription product. License sales and related maintenance account for the majority of Model N’s revenue, which totaled $89m in 2012. J.P. Morgan Securities and Deutsche Bank Securities are leading the offering.

Founded in 2006, Marin Software only really began selling its subscription-based digital advertising platform in 2009. Since then, the company has been growing quickly. Through the first nine months of 2012, it recorded $43m in sales, up 72% from the same period in 2011. Marin Software’s revenue retention rate has topped 100% in each of the past two years. Bookrunners are Goldman Sachs & Co and Deutsche Bank.

With the different vintages, business models and markets, Model N and Marin Software will undoubtedly appeal to different investor classes on Wall Street. Along with that, they will undoubtedly garner different valuations. Loosely, we figure Model N will debut at about a $400m valuation and Marin Software may come out at roughly $600m. After the dry spell that we’ve seen in the IPO market recently, $1bn or so of value creation from the two companies will be a welcome development in Silicon Valley.

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salesforce.com ‘connects’ with EntropySoft

Brenon Daly

Contact: Matt Mullen

Announcing its first acquisition in five months, salesforce.com has reached across the Atlantic for Paris-based startup EntropySoft. The eight-year-old target had raised just $3.5m in a single round of funding. EntropySoft produces perhaps the most complete set of enterprise system connectors in the marketplace. These bits of technology allow the interoperability of data between management platforms, and have found their way into many Web content management, enterprise content management and enterprise search platforms.

While connectors will never be seen as ‘sexy’ technology, they are a fundamental underpinning of many integration strategies for vendors and provide a stable income for those that create and maintain them. So why would salesforce.com, a company that will put up about $3bn in revenue this year, want a stable if unexciting income stream? The truth is that it doesn’t.

What it wants, from our view, is EntropySoft’s technology. Specifically, salesforce.com wants the ability to make greater inroads toward positioning CRM as the single repository for enterprise information. Having the predominant connectivity stack as part of its toolkit makes that process simpler. It allows, for example, much easier exposition of content from legacy systems to the CRM repository and the platform that salesforce.com has built atop it with Force.com and Site.com.

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On its way to (eventual) IPO, Alfresco does its first bit of M&A

Brenon Daly

Contact: Brenon Daly

In its first-ever acquisition, Alfresco Software has reached for an existing partner, WeWebU Software. The purchase of the 13-year-old German startup adds more management capabilities – specifically, a roles-based, configuration application framework – on top of Alfresco’s core ECM platform. In addition to customization, WeWebU should also enhance the mobile offering at Alfresco with its iOS-focused MobileWorkdesk front end.

The purchase comes as the open source company transitions from a founder-led, relatively low-profile business to one that’s eyeing the public market, at least down the road. As part of that change, just two weeks ago Alfresco appointed Doug Dennerline to the top job at the company.

A SaaS-veteran, Dennerline joins Alfresco as it finds itself competing on a new front. In addition to established ECM rivals such as EMC (Documentum), OpenText and, of course, Microsoft’s SharePoint, Alfresco is increasingly bumping into newer cloud-based startups, notably Dropbox and Box.

To combat that, Alfresco has shored up its platform with increased security and compliance to appeal to IT departments, as well as added a cloud offering of its own. Additionally, it has stressed that ECM is part of a larger business process – a function that should be made easier now with the addition of WeWebU’s configuration technology.

For more real-time information on tech M&A, follow us on Twitter @MAKnowledgebase.

NetSuite shops for its retail platform

Brenon Daly

Contact: Brenon Daly

One year after Retail Anywhere released its point-of-sales SuiteApp for NetSuite, the startup has been rolled into the on-demand ERP giant. Terms of the deal, which is NetSuite’s first since mid-2009, weren’t released. However, we suspect the price is probably in the $20-30m range of NetSuite’s two previous acquisitions.

Entirely bootstrapped through its 18 years of incorporation, Retail Anywhere has about 30 employees, with CEO Branden Jenkins taking a general manager role at NetSuite. According to our understanding, Retail Anywhere was generating roughly $5m of sales. For its part, NetSuite will likely report more than $300m of revenue for 2012 when it releases its financial results in early February. The market currently values NetSuite at a stratospheric $5bn.

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Oracle pays up for an ‘Eloquent’ marketing platform

Brenon Daly

Contact: Brenon Daly

Two months ago, we noted that Oracle was rumored to be looking to acquire a marketing automation vendor. At that point, the buzz was that the acquisitive software giant, which has done social media-flavored marketing deals recently, was eyeing Marketo to be its platform. Instead, Oracle went with Eloqua, paying $956m for the company (on a fully diluted equity basis).

Eloqua, which went public in August but recently shelved a subsequent follow-on offering, had about $85m in cash, giving the proposed transaction an enterprise value of $871m. Using that figure, Oracle is valuing Eloqua at about 9.7x trailing sales – a valuation that’s about 50% higher than it paid in either of its acquisitions of fellow publicly traded SaaS application vendors over the past 14 months. (Both RightNow and Taleo went off at closer to 6.5x trailing sales.)

For Eloqua, the deal wraps a short – but rather profitable – stint on the public market. It only went public four months ago, but it is leaving the Nasdaq at twice the price it joined. Eloqua first sold shares to the public at $11.50, while Oracle is paying $23.50 for each share in the acquisition. The transaction is expected to close before mid-2013.

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EMC lays out a ‘Pivotal’ plan

Brenon Daly

Contact: Simon Robinson, Brenon Daly

Those wondering what ex-VMware chief Paul Maritz would end up doing as head of EMC strategy now have part of an answer: he’s going to run the Pivotal Initiative, what looks like a pending spinoff that brings together a number of ‘big data’ and cloud assets that EMC and VMware have developed and acquired in recent years. This new, 1,400-person organization (600 from VMware and 800 from EMC) will be ‘formally united’ by mid-2013, though the operational structure has yet to be determined.

At the core of the move is a desire to help EMC and VMware better capitalize on the effects that cloud computing is having on the application development and big data markets, with ‘new levels of focused investment.’ The initiative is centered on EMC’s Greenplum and Pivotal Labs, VMware’s vFabric (including Spring and GemFire), Cloud Foundry and Cetas, as well as other unspecified groups. Moving these assets into a single division also will allow both EMC and VMware to focus on their core businesses.

The planned joint venture continues the ongoing shuffle of assets between the parent company and its subsidiary. Since EMC sold a minority stake of VMware to the public in mid-2007, the company has sold at least two businesses to VMware. In early 2010, EMC divested its Ionix unit, with the service management unit finding a home in vCenter. A little more than a year later, the enterprise storage giant (quietly) sold its consumer online backup business, Mozy, to VMware.

For more real-time information on tech M&A, follow us on Twitter @MAKnowledgebase.

Marketo in the market?

Brenon Daly

Contact: Brenon Daly

Although a couple of marketing automation vendors have, collectively, generated $2bn of market value in two recent richly priced IPOs, the next significant exit in the sector may be a trade sale. Marketo is rumored to be checking the market to gauge interest from buyers. High on that list of interested suitors, according to several sources, is Oracle.

A sale of Marketo, if it happens, would reverse the expected path of the six-year-old company. It doubled sales in 2011 and, we understand, will roughly double sales again this year to about $55m. That rapid growth helped push the company’s valuation in a round of funding in 2011 to about $500m, according to sources.

Obviously, a buyer would have to top that level to take home Marketo. In addition to Oracle, other companies that may have taken a look include salesforce.com and Intuit, market participants say. Some of the interest may have been spurred by ExactTarget’s recent purchase of Pardot.

Still, price may prove a snag for any acquisition of Marketo. Wall Street has given a warm embrace to two of Marketo’s rivals that have come public in the past six months or so. ExactTarget currently trades at about $1.5bn, or 5.3 times 2012 projected sales, while Eloqua garners a market capitalization of $650m, or 7.1 times this year’s sales. Of course, Marketo is growing much faster than either of its larger rivals.