SaaS Software Cloud Update – January 2018
Navidar | February 21, 2018
Public Markets and M&A Activity
The Navidar SaaS Software Cloud Index advanced 7.6% in January, roughly in line with the NASDAQ’s 7.4%. Following is a summary of the company-specific issues related to selected stocks in our coverage universe that meaningfully out- or under-performed as well as relevant M&A activity and Navidar events.
Navidar represented Kimbia in its sale to GiveGab. Kimbia is an online fundraising, crowdfunding, and event platform for nonprofits, higher education, and community foundations. GiveGab’s software cultivates long-term giving relationships between nonprofits and their supporters, empowering fundraising campaigns and events, managing volunteer opportunities and supporters, and participating in Giving Days.
Callidus Software (NASDAQ: CALD +25.5%) – SAP announced plans to acquire the SaaS lead-to-money suite provider for $2.4B, representing a 10% prior-close premium and an EV/revenue multiple of 8.0x. This all-cash deal follows several other SAP purchases of marquee public SaaS companies, including Concur, SuccessFactors, and Ariba. CALD will greatly improve SAP’s CRM suite, complementing it with SaaS sales enablement and performance management at scale. Concurrent with the announcement, CALD also reported 4Q17 results—SaaS revenue of $54.6M grew 30% YOY with $13M of cash from operations and a cash balance of $150.5M.
GoDaddy (NYSE:GDDY +9.8%) – announced plans to purchase enterprise social management company Main Street Hub for $175M (including $50M of earnouts). For a monthly fee, Main Street handles all aspects of small businesses’ online presences, including social media (flagship offering), CRM, reputation management, and mobile/web/email marketing automation. GDDY serves 17M-plus small business customers. While it has a professional web services division that helps with building websites and managing SEO for small businesses, MainStreet fills the social-media gap in GDDY’s solution suite.
Workday (NASDAQ: WDAY +17.8%) – the SaaS enterprise focused HCM and financial management provider acquired SkipFlag, which creates AI knowledgebases using companies’ internal communications. Deep learning models augment human intelligence based on data that sits across multiple applications. SkipFlag will be folded into WDAY’s core platform. WDAY is committed to investing in machine learning, advanced search, and natural language processing .
Asure Software (AUS +7.6%) – the SaaS payroll, HCM, and space management provider acquired three of its resellers (Savers Admin, Sheakley, and TelePayroll) for $30.6M, reflecting a forward revenue multiple of 2.3x based on 2018E revenue of $13M. These deals are in line with ASUR’s strategy of rolling roll-up the 130 or so resellers of Evolution (acquired in May 2017 for $55.0M) and Mangrove (purchased March 2016 for $17.3M). Asure also increased its 2018 revenue guidance by $8-9M, to $78-81M, with non-GAAP EBITDA of $18-20M.
ServiceNow (NYSE: NOW +14.2%) – the SaaS support solution provider reported strong 4Q17 results. Revenue of $531.0M advanced 38% YOY and EPS were $0.35. NOW signed 41 deals over $1M in annual contract value and cross-sell was also strong — most of its top deals included at least four products. Furthermore, about 840 of Forbes Global 2000 are customers and NOW is targeting 1,000 by 2020.
Atlassian (NASDAQ: TEAM +18.6%) – the SaaS collaboration solution provider reported strong CY4Q17 results. Revenue was $212.6M, up 43% YOY, and free cash flow margin was 32%. The outperformance was driven by continued strength in cloud, server, and data center as well as adoption outside of IT departments. It added 4,825 net new customers and now has 112,571 total that pay $7,555 annually on average. These customers use TEAM to organize, discuss, and complete shared work. Also, Trello (acquired in January 2017 for $425M) is guided to contribute $20M of revenue in FY2018 (ending June).
Amazon (NASDAQ: AMZN +24.0%) – the Internet and IaaS conglomerate’s 4Q17 results exceeded expectations, driven by seasonally strong holiday revenue and profitability improvements. Data collection and computing efficiencies are driving innovation and margin scalability. In addition, AMZN along with JP Morgan and Berkshire Hathaway announced a non-profit venture focused on reducing health spending. Speculation about this JV ranges from complementing to completely replacing the vendors that currently administer employees’ pharmacy and health-insurance benefits.
Also, AMZN’s cloud business acquired Sqrrl, a cybersecurity company that was carved out of the National Security Agency. This purchase follows AMZN’s late 2017 announcement about plans to create a “secret” region of data centers.
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