Oracle’s email marketing acquisition looks like spam

Contact: Scott Denne Matt Mullen

Oracle spends $1.6bn ($1.5bn net of cash acquired) on email marketing company Responsys – a hefty price tag for an asset that brings few new capabilities to the company.

Much of the technology Oracle is buying duplicates what it already has from its acquisition of Eloqua, which it bought exactly a year ago to be the centerpiece of its marketing efforts. So in that regard, this deal is essentially an expensive tuck-in. Oracle values Responsys at 7.7x TTM revenue – just a click higher than ExactTarget fetched in its sale to, and that transaction was meant to be the CRM vendor’s marketing centerpiece.

Further, Responsys also generates a meaningful portion – 30% – of its revenue from professional marketing services. Nixing the services business would give Responsys a straight price-to-product valuation of 11.3x sales.

The deal isn’t completely without merit, however. Responsys does give Oracle business-to-consumer marketing expertise and a functional, if not differentiated, email marketing product that it didn’t get with Eloqua. And Responsys also posted 26% year-over-year growth in the first nine months of the year, but its $194m in trailing sales is hardly enough to boost Oracle’s stagnating software revenue.

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