Competition The Issue As Marketo Pivots To Enterprise
Marketo Looks Good To Go For A Pre-Q4 Earnings Buy
Tue, May 31, 10:02 AM
- A few days after dealReporter stated P-E firm Vista Equity is close to a deal to buy Marketo (MKTO +8.9%), the cloud marketing automation software firm announces Vista is buying the company for $35.25/share in cash. The price represents a 9% premium to Friday's close, and a 64% premium to where Marketo closed on May 9, before the first sale report arrived.
- The deal, the latest in a flurry of P-E purchases of enterprise tech firms, is expected to close in Q3.
Fri, May 27, 3:00 PM
Fri, May 27, 1:53 PM
- Sources tell dealReporter P-E firm Vista Equity is close to an agreement to buy Marketo (MKTO +6.7%), and that a deal could be announced in the "next couple " of weeks.
- The site adds Marketo's lack of profits limited buyout interest, and that Vista will have to show it can deliver major cost cuts to secure debt financing for the deal.
- Marketo surged earlier this month on reports the company is exploring a sale. There had been speculation Microsoft (NASDAQ:MSFT) and/or SAP - each of which could use Marketo's cloud marketing automation software to fill out their cloud CRM software lines and better compete against Oracle/Salesforce - would bid for the company.
- Shares are up 43% since the reports arrived on May 10. If Vista buys Marketo, Microsoft/SAP buyout speculation could turn towards rival HubSpot (HUBS +0.8%).
Tue, May 10, 4:12 PM
- Reacting to news of a possible sale of Marketo (NASDAQ:MKTO) -- which just closed up 24.7% after spiking 15% on earlier chatter -- Credit Suisse believes SAP is the most likely acquirer.
- Several vendors are still missing critical CRM components, the firm says, and Microsoft (NASDAQ:MSFT) is a potential bidder as well.
- Acquisitions in the cloud sector have tended to focus on the multiples of enterprise value to the last-12-months subscription revenues, it says.
- Modeling several acquisitions over the past year and applying that multiple to Marketo ($198.9M in last-12-months sub revenue, and revenue growth of 38.1%) brings a share price of $44.35 -- 65.7% upside from the just-inflated closing price. Applying a standard error to the multiple brings a warranted price range of $37.03-$51.67 (38% to 93% upside).
- Now read Competition The Issue As Marketo Pivots To Enterprise »
Tue, May 10, 2:48 PM
- Marketo (NASDAQ:MKTO) has resumed trading after a volatility halt, spiking up 15.5% on reports that it's considering strategic options, including a possible sale of the company.
- Shares had moved in early April on similar talk, possibly with acquisition interest from Microsoft or SAP.
- Later last month, Bernstein speculated that most likely acquirers were SAP, Adobe (NASDAQ:ADBE) and Microsoft (NASDAQ:MSFT).
- Now read Competition The Issue As Marketo Pivots To Enterprise » »
Tue, Apr. 26, 4:08 PM
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Thu, Apr. 21, 1:09 PM
- Three months ago, cloud/SaaS software firms sold off after cloud IT service management software (ITSM) firm ServiceNow (NOW +14.5%) missed its Q4 billings guidance and offered light 2016 sales guidance. Today, the group is rallying after ServiceNow beat Q1 estimates, provided in-line guidance, and reported billings of $376.7M, up 41% Y/Y and beating guidance of $360M-$365M. The company also reported a 48% Y/Y increase in clients with over $1M in annualized contract value, to 249.
- Cloud gainers include HR/financials software leader Workday (WDAY +2.3%), ERP/commerce software firm NetSuite (N +4.9%), marketing automation software firms Marketo (MKTO +3.1%) and HubSpot (HUBS +3.2%), talent management software firm Cornerstone OnDemand (CSOD +2.9%), customer support software firm Zendesk (ZEN +3.8%), collaboration/project management software firm Atlassian (TEAM +2.6%), enterprise healthcare software firm Castlight (CSLT +5.4%), and life sciences software firm Veeva (VEEV +2.4%). The Nasdaq is nearly flat.
- BTIG's Joel Fishbein has hiked his ServiceNow target by $5 to $85, while reiterating a Buy rating. "Strong results across the board suggest that the company continues to see success both in core ITSM and as a broader enterprise service tool. After enjoying most of its public life as a beat-and-raise stock, 2015 was somewhat messy; strong growth and good [key performance indicators] supportive of the bull thesis were overshadowed throughout the year by minor miscues -- a forecasting error, currency adjustments, and inconsistent billings reporting.
However, 1Q was clean, with strong billings growth, healthy upsells, and metrics showing growing contribution from non-IT services. Law of large numbers is still looming on the horizon but ServiceNow is on the path of being one of a few elite category-leading enterprise SaaS companies. We continue to be buyers of NOW."
Thu, Mar. 17, 10:46 AM
- Robin Ritenour, formerly Adobe's VP of partner strategy and alliances and Salesforce's VP of strategic alliances and go-to-market, has been named Marketo's (MKTO +0.9%) SVP of business development.
- She'll report to CEO Phil Fernandez, and head the cloud marketing automation software firm's business development, strategic alliances, and partner teams.
Wed, Feb. 10, 1:18 PM
- Up yesterday afternoon after delivering a Q4 beat and issuing mixed 2016 guidance (sales guidance was below consensus, and EPS guidance above), Marketo (NASDAQ:MKTO) is now going in the opposite direction. JPMorgan and Susquehanna have lowered their targets, but no downgrades have arrived.
- On the earnings call (transcript), CEO Phil Fernandez mentioned Marketo is seeing some enterprise deal price pressure. "What I would characterize as desperate price competition coming from the large suite vendors that are our primary competitors. We're seeing them literally give away their products to try to block us from closing deals, when we have one clear user preference. And we see this resulting in deal delays and lower price points in some highly competitive situations."
- He elaborated a bit in the Q&A - the rival he's referring to could be Oracle, which has acquired cloud marketing automation software vendors Eloqua and Responsys. "[The price pressure] is largely with our primary enterprise competitor that's acquired several competing products and space, and has an ability both with enterprise pricing and selective deal targeting to really to play hard when they're losing deals."
- On the other hand, Fernandez denied macro pressures are having a big impact. "I don't attribute anything to macro at this point. With respect to the percentage of dollars spent on [marketing] versus the rest of the budget. You guys know, Marketo represents a fairly modest percentage. And frankly, you can't really run all the digital programs you want to run without a system like Marketo."
- Marketo's Q4 results, guidance/details
Tue, Feb. 9, 5:34 PM
Tue, Feb. 9, 5:31 PM
- Marketo (NASDAQ:MKTO) has jumped to $17.50 after hours after beating Q4 estimates (moreso on EPS than revenue) and reporting calculated billings rose 31% Y/Y to $68.1M (above revenue of $58.3M, +38%). Shares made a fresh 52-week low of $15.17 earlier today, and had closed just $0.53 above it.
- Guidance: 2016 guidance is for revenue of $267M-$277M (from 2015's $209.9M) and EPS of -$0.47 to -$0.53; the former is below a $277.1M consensus, and the latter above a -$0.58 consensus. Q1 guidance is for revenue of $61M-$62M and EPS of -$0.16 to -$0.18 vs. a consensus of $61.6M and -$0.19.
- Q4 details: The deferred revenue balance totaled $92M at the end of December, up 46% Y/Y but below guidance of $93M-$95M. GAAP operating expenses rose 22% Y/Y in Q4 to $54.8M, with $33.7M spent on sales/marketing. Marketo ended Q4 with $107.2M in cash and less than $3M in credit facility debt.
- Marketo's Q4 results, earnings release
Tue, Feb. 9, 4:09 PM
- Marketo (NASDAQ:MKTO): Q4 EPS of -$0.13 beats by $0.10.
- Revenue of $58.3M (+37.7% Y/Y) beats by $0.16M.
Mon, Feb. 8, 5:35 PM
Thu, Jan. 28, 2:53 PM
- Though the Nasdaq is up 0.8%, enterprise cloud software firms Salesforce (CRM -2.7%), Workday (WDAY -3.8%), Demandware (DWRE -4.5%), Veeva (VEEV -3.5%), Cornerstone OnDemand (CSOD -3.3%), Marketo (MKTO -4.4%), Actua (ACTA -2.4%), HubSpot (HUBS -6.2%), and Zendesk (ZEN -2.7%) are lower after cloud IT service management (ITSM) software leader ServiceNow (NOW -16.5%) posted a Q4 billings miss to go with revenue/EPS beats and issued light 2016 sales guidance.
- On ServiceNow's earnings call (transcript), CFO Michael Scarpelli attributed the billings shortfall to a ~$5M forecasting error. Regardless, Mizuho and MKM have responded to the Q4 report by downgrading to Neutral. Mizuho: "We find two [billings] misses in one year concerning." The firm is also worried about a premium valuation, missed quotas by sales reps, and a "large customer's preference to cut payment terms in half."
- MKM is less concerned about the billings miss, and calls Q4 results solid. But the firm is worried about macro pressures, and thinks ServiceNow's track record of major op. margin guidance beats is "unlikely to be sustained given decelerating billings and the current macroeconomic environment."
Tue, Jan. 26, 8:22 AM
- Cloud ERP/e-commerce software firm NetSuite (NYSE:N), cloud marketing automation software firm Marketo (NASDAQ:MKTO), and cloud HR/payroll software firm Paylocity (NASDAQ:PCTY) have each been downgraded to Underperform by BofA/Merrill ahead of their calendar Q4 reports.
- Separately, Piper's Katherine Egbert has cut her NetSuite target by $6 to $72, while reiterating an Underweight rating. She expects NetSuite to deliver in-line Q4 results when the company reports on Thursday afternoon, with "some potential for upside in 2016 guidance" thanks to the Bronto Software acquisition. "N's premium multiple seems reflective of the unique ownership structure, potential M&A and relatively low float. A multiple closer to the high 20%'s revenue and billings growth rate would make the stock a more compelling buy in our view."
- Paylocity is down 2.3% premarket; NetSuite and Marketo haven't yet moved. Paylocity, which soared post-earnings in November, reports on Feb. 4. Marketo, which briefly dropped post-earnings in October, reports on Feb. 9.
Marketo, Inc. is a provider of a cloud-based marketing software platform that enables organizations to engage in modern relationship marketing. It specializes in marketing automation and sales effectiveness software for mid-size and enterprise business-to-business (B2B) companies. Its software... More
Industry: Application Software
Country: United States
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