Contact: Liam Eagle Scott Denne
GoDaddy is not typically in the business of obtaining subscribers via M&A. Its deals (10 in the past 24 months) tend to focus on picking up technology or market specialization. The fact that GoDaddy is willing to shell out for Apptix’s hosted Exchange business speaks to the company’s confidence in the lifetime value of these users. Reselling Office 365 has been a major driver of new business since GoDaddy began offering it in January 2014. As an upsell from domain registration (GoDaddy’s largest business), hosted email might be a more frictionless sale than even Web presence.
GoDaddy will pay $23m for the asset and will inherit approximately 60 employees. Following the close, the acquired customers will be migrated to Office 365 through GoDaddy. Apptix posted about $15m in annual revenue from its hosted Exchange business. In addition to the upfront consideration, GoDaddy is on the hook for an earnout that could be as high as $16m if every customer migrates to GoDaddy. A more likely scenario, according to the seller, is that it will get paid 50% of the earnout.
Apptix’s desire to part with its multi-tenant Exchange hosting users speaks to the challenge of positioning a mass-market hosted Exchange product in a world where Office 365 (hosted by Microsoft) is a simple alternative. Almost across the board, service providers focused on Exchange hosting have been narrowing their focus on specialized situations, such as hybrid, private and custom engagements for which Office 365 might not be a fit.
Pacific Crest Securities advised Apptix on its sale.
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