Category: Web analytics

Where might Omniture shop next?

-by Thomas Rasmussen, Kathleen Reidy

When we checked in with Omniture last month, we noted that it was likely to do a bit of shopping. My colleague Kathleen Reidy expanded on that recently with an in-depth report on the possible M&A moves by the analytics giant. Omniture has already shown itself ready to shop, having picked up five companies since its IPO in 2006. Those acquisitions, along with a solid organic growth rate, have helped to push up Omniture’s revenue seven-fold in the past three years. The company finished 2008 with $296m in sales. First-quarter results are due Thursday before the opening bell.

Having essentially consolidated its core market (except for a few private competitors), where might the giant shop next? We think a broader push into marketing automation seems a logical next step. Email marketing is one of the most active areas of Omniture’s Genesis ISV partner program. Potential targets in this space include Eloqua, a well-known and established player in marketing automation. The vendor pulled in an estimated $35m in revenue last year and has so far raised more than $40m in venture funding. Other potential targets include Silverpop, Right On Interactive and Marketbright. Like Mercado Software, which Omniture scooped up last October, all of these email marketing startups are Genesis partners.

Omniture’s acquisitions to date

Target Date Deal value Technology/Rationale
Mercado Software October 14, 2008 $6.5m Retail site search/merchandising
Visual Sciences October 25, 2007 $394m Web analytics market share
Offermatica September 7, 2007 $65m Multivariate testing
Touch Clarity February 14, 2007 $48.5m Behavioral targeting
Instadia January 18, 2007 $11.4m Web analytics market share – Europe

Source: The 451 M&A KnowledgeBase

Omniture: the optimistic opportunist

-Contact Thomas Rasmussen

After digesting its $382m double-down acquisition of competitor Visual Sciences last year, Web analytics firm Omniture is bullish on buying. At the Pacific Crest Securities conference last week, the company outlined its M&A strategy, which essentially boils down to one word: opportunistic. It tucked in its struggling competitor Mercado Software for $6.5m in November 2008, adding an estimated $12m to its top line. The company had raised $66m in venture capital over the past 10 years. Omniture told us some of Mercado’s large customers had in fact approached it to do the deal. Moreover, Omniture said its remaining privately held competitors Coremetrics and WebTrends are struggling. The company added that it’s seeing an increasing amount of their customers transition over (some even in mid-contract), and it’s ready to deal, as long as it’s at 2009-type discounts.

Not so fast, say the two firms, which we estimate ring up combined revenue of just south of $200m. WebTrends, which PE shop Francisco Partners took off of NetIQ’s books in 2005 for $94m, says that despite a shakeup in management, the company is well positioned. It cites profitability, consistent quarter-over-quarter growth, its highest revenue quarter in its history last quarter, and says it has no need for further funding from its rich backer. (Reports Thursday indicated that Francisco is set to begin raising a third fund, targeting at least $2bn.) Meanwhile, Coremetrics seems to have overindulged on venture capital, closing a $60m series E round last March, bringing its total raised to date to $111m. We tend to get skeptical when this happens, especially in this environment. However, CEO Joe Davis assured us that having shelved further funding-related expansion plans, the company has the majority of the latest round in the bank. Its January restructuring will return the company to cash-flow neutral this month, and cash-flow positive going forward, and it is on track to grow revenue 20% year over year. The CEO added, “Rumors of my death have been greatly exaggerated by my competitor.”

With more than $80m in cash and short-term investments, its profitable standing and surprisingly upbeat outlook, Omniture can certainly handle a few more tuck-ins. Will it scoop up its feisty rivals? At the moment, it certainly does not look like it. In fact, competitors Coremetrics and WebTrends, which haven’t been in the market since 2006 and 2007, respectively, say they are looking at doing some buying of their own and have the cash to do so.

Omniture M&A

Completed Target Enterprise value Revenue multiple Price per customer
November 2008 Mercado Software $6.5m 0.5x* $32,500*
January 2008 Visual Sciences $382m 5.0x $240,302
December 2007 Offermatica $65m 7.2x* $650,000

Source: The 451 M&A KnowledgeBase *451 Group estimate