WEB NEWS Research
Alert Sent to Members on 1/15/2013
On December 18, 2012 we added Selectica Inc. (NASDAQ: SLTC) to our 52 week high screen @ $6.40 per share and sent our research note to members in our December 19, 2012 email. In our January 3, 2013 Seeking Alpha article, ‘Is Revamped SaaS Company Selectica Ripe for a Take Over’
Our analysis of the SAAS space also landed E20 Pen (NASDAQ:EOPN) on our plate. EOPN completed its IPO on July 26th 2012 at $15 and now trades around $18.50.
While EOPN does no directly compete with ELOQ or SLTC, it is still a SaaS company playing in a sexy industry. However, like ELOQ, it provides a product to help streamline a process. ELOQ streamlines the lead generation/marketing process, while EOPN offers a broader service to help streamline processes across several aspects of a business operation.
Coincidently, Exacttarget (NYSE:ET) is another recent SaaS IPO that looks cheap compared to ELOQ. Trading at around $22.00, ET is a direct comparable to ELOQ. In fact, ET actually mentioned ELOQ as a competitor in its IPO prospectus. Exacttarget’s shares actually traded near $30.00 in March 2012, a price on par with ELOQ’s takeout valuation multiples.
Although this article is primarily about ET and EOPN, investors may also be interested in monitoring two other SaaS companies; Responsys (NASDAQ:MKTG) , which directly competes with both ELOQ and ET, and Tangoe (NASDAQ:TNGO) , a recent IPO. Both are selling well below ELOQ’s EV/Sales takeout multiple. To see more details on these two companies, see our SaaS Screen. (Blog Password is GEOTEAM, all caps)
In the end, we believe that if the SaaS sector stays hot, EOPN and ET could quickly rise to as high as $24 and $30 , respectively.
Please see our full article here.
Alert sent on 4/4/2013 we mentioned that we held a tepid position in ET due to takeover speculation.
Alert sent on 6/4/2013
Exacttarget (NYSE:ET) ($22.10 ) to be acquired by Salesforce.com Inc (NYSE:CRM) ($41.04 ) for $33.75 per share , or a 53% premium over yesterday's closing price. ET joins the growing list of GeoBargains/GeoSpecials/Special Situation companies to be acquired that the GeoTeam has been tracking.
The takeout price was of $33.75 was in the exact price range that the GeoTeam had predicted in our 1/15/2013 article “Exacttarget and E2 0pen: Two Intriguing SaaS Plays ”, which highlighted EOPN and ET as two undervalued SaaS plays. In our article we stated:
“Given that the trend that take out valuations are increasing, we believe that the market may look to ELOQ as a proxy when valuing EOPN and ET. Using EV/Sales of 7 to 8 equates to a price target of:
$22.33 to $25.34 for EOPN (average of $23.84), or about a 30 % premium from current prices and
$30.64 to $34.57 (average of $32.61) for ET, or about a 50% premium from current prices.”
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Acquisitions
SAN FRANCISCO & INDIANAPOLIS--(
BUSINESS WIRE )--Salesforce.com (NYSE: CRM), the world’s #1 CRM platform (http://www.salesforce.com/), and ExactTarget (NYSE: ET), a leading cloud marketing platform, today announced that they have entered into a
definitive agreement under which salesforce.com will acquire ExactTarget in a transaction valued at approximately $2.5 billion. Under the terms of the agreement, salesforce.com will commence a tender offer for all
outstanding shares of ExactTarget for $33.75 per share, in cash. The transaction has been unanimously approved by the Boards of Directors of both companies.
Comments & Business Outlook
First Quarter 2013 Results
Revenues of $88.9 million, a 39 percent increase compared to the first quarter of 2012.
Adjusted net loss of ($5.8) million, or $(0.08) per share on a basic and diluted basis, compared to $(2.2) million, or $(0.15) per share on a basic and diluted basis, in the first quarter of 2012.
"Our first quarter revenue growth was outstanding at 39 percent on a GAAP basis and 40 percent on an adjusted basis, making us one of the fastest growing software-as-a-service companies in the world," said Scott Dorsey, ExactTarget chairman, chief executive officer and co-founder. "ExactTarget has emerged as the digital marketing platform of choice for many of the world's most innovative B2C and B2B brands.”
Business Outlook:
As of May 9, 2013, ExactTarget is issuing guidance for the second quarter of 2013 and increasing its outlook for full-year 2013 as follows:
Second Quarter 2013:
Adjusted Revenue :Adjusted Net (Loss) / Income: expected to be $(7.0) million to $(8.0) million.
Adjusted Net (Loss) / Income per Share: expected to be $(0.10) per share to $(0.12) per share on a basic and diluted basis assuming weighted average shares outstanding of approximately 69 million shares.
Full Year 2013:
Adjusted Revenue: expected to be $376.0 million to $379.0 million, excluding the impact of adjusting deferred revenue to fair value under purchase accounting. This is an increase from prior guidance of $370.0 million to $374.0 million.
Adjusted Net (Loss) / Income: expected to be $(20.0) million to $(22.0) million.
Adjusted Net (Loss) / Income per Share: expected to be $(0.29) per share to $(0.31) per share on a basic and diluted basis. This assumes weighted average shares outstanding of approximately 70 million shares.
