Eloqua CEO Joe Payne weighs in with his provocative thoughts on today’s news that Teradata has agreed to buy Aprimo.
Q: Were you surprised by the news that Teradata agreed to buy Aprimo?
A: No. Ever since Aprimo pulled their S1 there have been rumors about them shopping themselves. The deal itself is a healthy multiple and that shows you how important this category is. Many experts, like Jonathan Block at Sirius Decisions and others – have been predicting consolidation in the marketing automation and adjacent categories for quite some time.
Q: Why do we see consolidation in Marketing Automation?
A: We are solving a very critical issue for organizations: how to grow revenue. Many companies who sell CRM (Oracle, IBM, SAP) are seeing an opportunity to sell into a prospect’s marketing organization to optimize revenue performance. The CMO and Chief Sales Officer need tools now and large organizations want to sell them those tools. This is most evident with IBM’s recent acquisitions: Unica, Coremetrics and Datacap; and Oracle’s acquisition of Market2Lead’s assets.
It is important to realize that this is also a high growth market. Eloqua has grown from $11M in revenue to over $50M in revenue in the last few years. Consolidation occurs when there is a high-growth market that is important to the enterprise and there are large players in adjacent spaces.
Q: What is the strategy behind today’s announcement about Aprimo?
A: Teradata is an excellent analysis platform. Aprimo is an excellent Planning and Budgeting platform. Combining these solutions makes sense. I would not be surprised to see them in the future add an execution platform to do automated nurturing, scoring, sales enablement, and performance optimization.
Q: What about the sticker price: $525 million? Does that raise eyebrows?
A: It’s a high growth market and Aprimo has real revenues. Based on our internal estimates of Aprimo’s revenue, the multiple paid by Teradata is consistent with what strong companies in this space are realizing.
Q: Will we see more consolidation?
A: Across software, absolutely. Companies have cash to spend and are looking for acquisitions to grow. In this space, I’m not sure you will see much more consolidation. Larger companies typically like to buy organizations that have real revenues and a proven customer base. There are no companies left (aside from Eloqua) that have even $20M in revenue.
Q: Does Eloqua want to be acquired?
A: We are growing organically at a remarkable rate. Our growth rate is actually increasing on a larger base. We have had exceptional results in 2010 – far exceeding our own aggressive plans. In the last year, we invented the new category Revenue Performance Management. We just launched a landmark new product, Eloqua10. We are in a great position and have our eyes set on the public markets.