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Responsys (proposed MKTG) is scheduling a $61 million IPO with a market capitalization of $408 million at a price range mid-point of $9.25 for Thursday April 21, 2011. |
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SUMMARY |
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. For the year ended December 2010 vs 2009 sales increased 40% to $94 million, net income increased 43% to $8.6 million. |
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. Email marketing on steroids expanded to social media/networking, trying to get a software as a service (Saas) P/E multiple |
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. Market expected to grow at a compound annual rate of 22% |
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. Number of customers remains constant, in the 277 range. Has added, however, larger enterprise customers |
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VALUATION |
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. Pricing appears reasonable at $9.25 for MKTG |
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. At the price point mid-range of $9.25 the P/E for the year ended December 2010 is 45, the book value is 4.2 |
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. Not to be confused with true SaaS/cloud computing companies such as Salesforce.com (CRM) and Qlik Technologies (QLIK), which P/E trailing 12 month P/Es of 280 and 201 |
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. The only public competitor focused on MKTG’ s business mentioned in the S-1 is Acxiom Corp (ACXM). ACXM’s stock price declined 20% in the last six months, revenues declined 20% in 2010 vs 2009. ACXM sells at a trailing 12 months P/E of 26 |
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BUSINESS |
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. Email marketing on steroids, expanded to mobile, social media and networing |
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. MKTG’s "Interact Suite is a software-as-a-service, or SaaS, platform that empowers relationship marketers to effectively execute marketing campaigns across the key interactive channels—email, mobile, social and the web." |
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. Leading SaaS vendors, such as Salesforce.com are moving into cloud computing. MKTG makes no mention of cloud computing, which may not apply to their business model. |
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MARKET GROWTH |
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According to Forrester, U.S. interactive marketing spend on email, mobile and social media, the primary interactive channels currently used for relationship marketing, is expected to grow from $2.9 billion in 2010 to nearly $6.5 billion by 2014, representing a compound annual growth rate of 22%.( |
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S-1, page 1 |
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http://www.sec.gov/Archives/edgar/data/1084817/000119312511087415/ds1a.htm#toc109067_9 |
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NUMBER OF CUSTOMERS REMAINS CONSTANT |
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. MKTG has added larger enterprise customers with higher subscription commitments, higher messaging volumes and greater professional services demands. |
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. Had 277 customers as of December 31, 2010 |
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SEASONALITY & EXPECTATIONS |
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. MKTG anticipates subscription revenue for the quarter ending March 31, 2011 will be between 10% and 15% lower than subscription revenue for the quarter ended December 31, 2010. |
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. MKTGexpects to experience seasonality in the future and subscription revenue in the fourth quarter of 2010 may be higher than in each of the first three quarters of 2011. |
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. In 2009 and 2010 , December quarter revenue exceeded each of the succeeding quarters. |
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COMPETITION |
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Primary competitors include: |
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• Technology providers such as Aprimo, Inc., which has been acquired by Teradata Corporation, BlueHornet, a subsidiary of Digital River, Inc., Eloqua Corporation, ExactTarget, Inc., Silverpop Systems Inc., StrongMail Systems, Inc. and Unica Corporation, which has been acquired by IBM; and |
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• Marketing services providers such as Acxiom Digital, Epsilon Data Management LLC and Experian CheetahMail and Yesmail, a division of infoGROUP Inc |
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USE OF PROCEEDS |
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$45.5mm from 5.5 million shares, shareholders intend to offer 1.1mm shares |
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For working capital and other general corporate purposes |
