Digital Customer Engagement

Transcription

1 Digital Customer Engagement First Analysis Investment Banking Industry Update July 2013 Industry Focus: Wave of Consolidation Changing Landscape for Digital Customer Engagement Solutions With the global ecommerce market continuing to be the growth hotspot, there is increasing need for platform companies to offer a full suite of solutions to digitally engage customers. More than ever, retailers are focused on maximizing resources to deliver targeted marketing to attract new customers, recapture lost revenue, drive up-sell and cross-sell opportunities, and keep their customers engaged. This puts increasing pressure on internal and external marketers to relevantly connect with the consumers via assorted online channels. In an unprecedented wave of activity, a number of large business software providers, media companies, and marketing players are rapidly acquiring digital customer engagement solutions to provide a more comprehensive suite of services for their clients. This consolidation includes ecommerce platforms (SAP buys Hybris), marketing (Salesforce.com buys Exact Target), and marketing automation (Oracle buys Eloqua). These established, scalable software solutions are receiving premium multiples as deals are competitive, they can provide increasingly critical customer engagement channels and enable a plug-and-play add-on solution to an existing business. However, these early acquisitions represent just a start to consolidation as the broader solution providers will strive to build a comprehensive one-stop-shop digital customer engagement platform that will include: CRM, ad tech, digital marketing, ecommerce, marketing automation, personalization, video sharing, social engagement, loyalty, and other behavioral commerce analytics solutions. End-to-end digital marketing is in sight (from customer acquisition, to close, to renewal, to add-on) and consolidation should continue. The Wave of Consolidation 11.0x 10.0x 9.0x 8.0x 7.0x 6.0x 5.0x 4.0x 3.0x 2.0x 1.0x 0.0x Digital Customer Engagement Index EV/Fwd Revenue M&A Transactions EV/Revenue Correlation Expon. (M&A between Transactions M&A Activity EV/Revenue) and Valuation IBM buys Unica Oracle buys Art Technology Responsys buys Eservices Group Teradata buys Aprimo Rightnow buys Q-go.com Google buys BeatThatQuote.com DemandTec buys M-Factor ebay buys GSI Commerce IBM buys DemandTec SAP buys Ariba Adobe buys Neolane Oracle buys Eloqua ExactTarget buys Pardot Salesforce.com buys ExactTarget Source: Capital IQ. Public Digital Customer Engagement Index includes: ACN, ACXM, ADBE, CTCT, DWRE, DRIV, EBAY, GOOG, MKTO, N, ORCL, SGE, SAP, SAPE, DATA, and TDC Chicago, IL 60 First Analysis Corporation One South Wacker Suite 3900 Chicago, IL

2 Industry Focus (continued) Review of Select Notable Digital Customer Engagement Deals Date Announced Target Acquiror Rationale and Comments Oct 2012 Pardot ExactTarget Dec 2012 Eloqua Oracle Will extend ExactTarget s ability to serve both business-to-business and business-to-consumer marketers worldwide. With the addition of Pardot, ExactTarget will attempt to redefine marketing automation and deliver the most scalable, comprehensive automation solution that helps both B-to-B and B-to-C marketers leverage the power of data to connect with customers across , mobile, social media and the Web. Oracle bought Eloqua to create a comprehensive Customer Experience Cloud offering to help companies transform the way they market, sell, support and serve their customers. The combined offering is expected to enable organizations to provide a highly personalized and unified experience across channels, create brand loyalty through social and online interactions, grow revenue by driving more qualified leads to sales teams, and provide superior service at every touchpoint. June 2013 ExactTarget Salesforce.com June 2013 Hybris SAP June 2013 Neolane Adobe Source: Company press releases and Capital IQ. Salesforce.com bought ExactTarget to further its mission of being the world s leading CRM platform by combining ExactTarget s leading digital marketing capabilities with Salesforce.com s leading sales, service and social marketing solutions. Salesforce.com customers will be able to extend their investments in sales, service and social marketing with access to a comprehensive marketing automation solution. ExactTarget s customer base will have access to social marketing capabilities, and will be able to leverage Salesforce.com s leading sales, service and platform solutions to transform their end-to-end customer experience. SAP primarily plans to boost its e-commerce platform and improve its customer experience with proper insight across all its channels. SAP believes that hybris business perfectly complements its exiting flagship HANA (specializing in analytical and cloud applications), JAM (social software platform) and 360 Customer solution (which introduced the SAP CRM application). The acquisition of Neolane will enable Adobe to utilize a number of social media-tracking and analysis tools for handling leads, marketing resource management, high-volume marketing campaigns and a real-time offer recommendation engine for personalized as well as one-to-one messages. After the closure of the deal, Neolane will become a part of Adobe s Marketing Cloud product line. Page 2 of 6

3 Industry Stock Market Performance The First Analysis Digital Customer Engagement Index has outperformed the broader market indices over both the long-term (last five years) and nearer-term (last year) periods. 5 Year Indexed Performance (June 2008 to June 2013) 1 Year Indexed Performance (June 2012 to June 2013) 100% Customer Engagement Index S&P 500 NASDAQ 35% Customer Engagement Index S&P 500 NASDAQ 81.2% 30% 28.9% 50% 48.4% 25.5% 25% 20% 15% 17.9% 16.0% 0% 10% 5% 0% (50%) Jun-08 Jun-09 Jun-10 Jun-11 Jun-12 (5%) Source: Capital IQ. Public Digital Customer Engagement Index includes: ACN, ACXM, ADBE, CTCT, DWRE, DRIV, EBAY, GOOG, MKTO, N, ORCL, SGE, SAP, SAPE, DATA, and TDC Public Market Trading Multiples Median public market valuations for companies in the industry are currently 3.41x 2013 consensus estimate revenue. 2013E Revenue Multiples 16.29x 16.17x 11.85x 10.32x Median Metrics EV / Revenue: 3.41x 5.00x 4.17x 3.80x 3.41x 2.86x 2.72x 1.56x 1.43x 1.39x 1.28x 0.81x DATA N DWRE MKTO ADBE GOOG SAP ORCL SGE TDC ACXM ACN CTCT SAPE DRIV 2013E Revenue Growth 51.2% 32.0% 25.0% 42.2% 19.2% 8.0% 1.6% 5.2% 2.0% Median Metrics Revenue Growth: 8.0% 13.3% 11.7% 3.6% (1.2%) (3.9%) (6.7%) DATA N DWRE MKTO ADBE GOOG SAP ORCL SGE TDC ACXM ACN CTCT SAPE DRIV Source: Capital IQ. Data as of June 30, Page 3 of 6

4 Industry Merger & Acquisition Activity M&A activity across the sector has been very robust with strategic, and to a lesser extent financial, buyers actively seeking acquisitions. Select strategic buyers continue to suite-up as they try to develop a more comprehensive solution suite while financial buyers prefer to look for opportunities where technology is being leveraged to more efficiently deliver services. Date Announced Select Industry M&A Transactions (Announced from 01/01/12 to 06/30/13) Status Target Buyer Target Business Description Transaction Value ($ millions) 06/27/13 Announced Neolane SA Adobe Systems, Provides enterprise marketing software to manage, automate, and optimize marketing programs. $ /05/13 Announced Hybris GmbH SAP AG Operates as a vendor of multi-channel communication and commerce software solutions. 06/04/13 Announced ExactTarget, Salesforce.com, Inc Cross-channel digital marketing SaaS solutions that enable organizations to communicate with their customers through the interactive channels. $2, /08/13 Closed OrderMotion, NetSuite Provides Web based order management and analytics solutions for ecommerce and direct-to-consumer businesses. 02/06/13 Closed Channel Intelligence, Google Provides technology services that drive online purchases. $ /10/13 Closed (m)phasize, LLC Sapient Corp. Develops marketing mix and cross marketing analytics solutions. 01/10/13 Closed Retail Anywhere NetSuite Provides point of sale and cloud-based retail management systems for midsize retailers in North America. 12/20/12 Closed Eloqua, Oracle Corporation Provides on-demand revenue performance management software solutions for businesses. $ /28/12 Closed Incentive Targeting, Google Provides targeted shopper promotion systems. 10/11/12 Closed Pardot, LLC ExactTarget, Provides cloud-based B2B marketing automation software solutions for companies with multi-touch sales cycles. $ /11/12 Closed igodigital, ExactTarget, Provides a suite of integrated product recommendation and social commerce solutions. $ /02/12 Closed Viewdle, Google Enables the creation of new user experiences in mobile gaming, social networking, social media, advertising, and marketing. $ /17/12 Closed SelectMinds, Oracle Corporation Provides software-as-a-service social networking solutions to companies around the world. 09/10/12 Closed Brilig LLC Merkle, Operates as a cooperative data marketplace for online advertising. 07/31/12 Closed Wildfire Interactive, Google Develops tools that enable organizations to engage various users of social network sites, such as Facebook and Twitter. (continued next page) Page 4 of 6

5 Date Announced Select Industry M&A Transactions (Announced from 01/01/12 to 06/30/13) Status Target Buyer Target Business Description Transaction Value ($ millions) 07/10/12 Closed Involver Oracle Corporation Provides social marketing management platforms for brands and agencies to connect across the social Web. 06/13/12 Closed SinglePlatform, Corp. Constant Contact, Provides and monetizes local restaurant content for publishers. $ /05/12 Closed Collective Intellect, Oracle Corporation Provides Web-based, automated, real-time text mining, and analytics software that enables social CRM. 06/04/12 Closed Buddy Media, Salesforce.com, Inc Provides a cloud-based software solution that enables agencies and brands to manage their social media presence and marketing campaigns. $ /23/12 Closed Vitrue, Oracle Corporation Provides social marketing publishing technology that enables businesses to manage, message, and moderate their presence on social networks. 05/22/12 Closed Ariba SAP America, Provides collaborative business commerce solutions for buying and selling goods and services. $4, /02/12 Closed TeaLeaf Technology, International Business Machines Corporation Provides customer experience management solutions for companies doing business online. 04/18/12 Closed Crowd Factory, Marketo, Provides crowd-powered marketing applications. 02/21/12 Closed aimatch, SAS Institute Provides cloud-based advertising server technology that allows digital publishers to sell and manage online ad inventory. 02/01/12 Closed Social Amp Merkle, Provides Facebook Open Graph and OAuth solutions for Fortune 500 brands and agencies internationally. 01/02/12 Closed MobManager Constant Contact, Owns and operates an online tool that enables to manage daily deals for small business owners. Source: Capital IQ and public announcements. Page 5 of 6

6 About First Analysis Investment Banking Founded in 1981, First Analysis has a 30 year track record of serving emerging growth companies and established industry leaders within its focused areas of domain expertise. Our investment banking practice leverages industry insights developed through our equity research and private equity activities to deliver value to clients across the life cycle of a business. Providing senior level attention to every client, First Analysis offers superior execution across a comprehensive range of investment banking services, including M&A advisory, public equity and debt financing, and private equity placements. First Analysis Securities Corporation One South Wacker Drive, Suite 3900 Chicago, IL Brian Friedman (312) bfriedman@firstanalysis.com Matt Nicklin (312) mnicklin@firstanalysis.com Dane Guarino (312) dguarino@firstanalysis.com This report has been prepared by the Investment Banking Department of First Analysis Securities Corporation and is provided for informational purposes only. This report is an overview and analysis of trends and is not intended to provide investment recommendations on any specific industry or company. Neither the information nor any opinion expressed constitutes a solicitation by us of the purchase or sale of any securities. This is not a complete analysis of every material fact regarding any company, industry, or security. The opinions expressed herein reflect our judgment at this date and are subject to change. The information has been obtained from sources we consider to be reliable, but we cannot guarantee the accuracy. Past performance and any projections herein should not be taken as an indication or guarantee of future performance. First Analysis Securities may act as financial advisor and/or underwriter for companies mentioned in this report. This report may contain information which was previously included in a First Analysis Research Report. A complete listing of all companies covered by First Analysis Equity Research and applicable research disclosures can be obtained by calling or writing to: First Analysis Securities Corporation, Equity Research, One South Wacker Drive, Suite 3900, Chicago, IL First Analysis Securities Corporation is a registered broker/dealer with FINRA and member SIPC. Page 6 of 6