Teradata eats Aprimo for $550m
Attack of the web marketers
Data warehousing specialist Teradata has acquired Aprimo, an outfit peddles Web-based marketing software. Teradata is paying $525m in cash and assuming $25m of the company's debt.
The move follows IBM's acquisition of Unica, which offers similar enterprise marketing management (EMM) solutions. Big Blue shelled out $480m to buy Unica back in August of this year. Oracle, which has significantly ramped up its data warehousing hardware in the past several years, offers similar business-to-consumer (B2C) and business-to-business (B2B) marketing campaign software through its Siebel acquisition. So as Oracle has moved into hardware and IBM has bought Unica in August and Coremetrics, a maker of Web analytics software back in June, Teradata had to do something to even out the odds.
Aprimo, which is privately held, was founded in the early years of the commercialized Internet - what we call the dot-com boom - back in 1998 by William Godfrey and Robert McLaughlin in Indianapolis, Indiana. Godfrey is currently chairman and chief executive officer of the company, while McLaughlin, who used to work for IBM's Tivoli systems management software division, is on the Aprimo board. Both are graduates are Notre Dame University, hence the Indiana location.
The company raised three rounds of venture capital funding during the dot-com boom, totaling $34m, and added another $12m round in 2002 after the boom went bust; First Analysis Venture Capital, Frazier Technology Ventures, JEGI Capital, and Sigma Partners kicked in the dough.
In September 2007, after surviving the economic downturn, Aprimo filed its S-1 statement to raise $50m by going public. The filing showed the firm growing revenues steadily from $19.9m in 2004 to $51.6m in 2006, and shifting from losses of $4.1m in 2004 and $13.3m in 2005 to a profit of $2.1m in 2006.
But profits were under pressure in 2007 as Aprimo tried to grow its business, and as the Great Recession got going in December of that year, it became obvious that 2008 was not going to be a great year for any company to go public. So in April 2008, Aprimo killed its IPO plan. When the company put out revenue figures for 2009 earlier this year, the thinking was that Aprimo was getting primed to go public again, But perhaps it was just trying to show off and shop itself around.
In 2009, the company booked $68m in revenues, which the company said came from a 29 per cent increase in recurring revenues and 15 per cent increase in total revenues compared to 2008. As 2009 came to a close, over 150,000 marketers from 40 countries. The company has over 200 unique customers worldwide (good heavens, how many marketing people per firm is that? Edgads!), with a majority of the top firms in financial services, life sciences, and retailing using its tools. The company has approximately 250 employees.
The Aprimo software is a software-as-a-service (SaaS) application that manages email and other marketing campaigns and their budgets, and measures their effectiveness to figure out a return on investment for those campaigns. Clearly, IBM and Teradata alike think that they can make money helping other people do a better job trying to generate sales leads and turn it into money. Alterian, SAP, and SAS Institute are also competing in this EMM space in one form or another, which Teradata says constitutes about a $5bn opportunity.
Under the acquisition deal announced by Teradata, Godfrey will be in charge of Teradata's application business. The company is not supplying roadmaps or integration details for making the Aprimo software work with Teradata clustered databases until after the deal closes some time in the first quarter of 2011 if regulators approve the deal.
Teradata says that Aprimo will be slightly accretive to its non-GAAP earnings in the first year after the deal is done. Teradata says that it will continue to develop and support its own Relationship Manager applications as well as the Aprimo Marketing Studio, and will eventually put together a joint roadmap for an integrated EMM product. These applications will be available to run locally and in hosted form, as Aprimo sells today, says Teradata.
In the quarter ended in September 2010, Teradata had $741m in cash and no debt. The Aprimo acquisition will blow a lot of Teradata's cash and put a little debt on its books. And that is probably why Wall Street has knocked Teradata's stock down by $1.13, to $41.93 per share (a 2.6 per cent decline), as El Reg goes to press. ®