Hot on the heels of its proposed acquisition of big data company DataRaker last week (see here), Oracle has now announced the purchase of SaaS marketing player Eloqua. Oracle is paying $871m or $23.5 per share, which is c30% premium on Eloqua’s share price prior to the announcement.
Eloqua provides cloud-based marketing automation and revenue performance management software. But like many SaaS pure plays, Eloqua is loss making. For the year ending 31 December 2012, Eloqua expects to make a non-GAAP operating loss of between $5.3m and $5.7m. However it is the revenue growth and prospects, which have helped Eloqua secure the high price tag. FY12 revenue is expected to be up 32% to c$94m - so Oracle is paying 9.2x that. Eloqua only went public back in August, at the price of $11.5 per share. Oracle’s purchase price means its value has more than doubled in five months. Hardly surprising then Eloqua's directors ‘unanimously approved the transaction’.
Having released an impressive set of Q2 results earlier this week (see Oracle: customers keen to close orders), Oracle continues to perform well. But its appetite for M&A shows how keen it is to both protect existing revenue streams and find new growth areas. Eloqua should help do just that, fitting well with its existing CRM systems, and expanding into the marketing department. Oracle now wants to create a ‘customer experience cloud’, which will offer a 'highly personalized and unified experience across channels, creating brand loyalty through social and online interactions, and growing revenue by driving more qualified leads to sales teams'.
We see the marketing and communications department as a big opportunity for many software/BP providers over the next few years as they seek to reduce costs while capitalising on new multi-channel interactions with their end customers (see Communications-focused BPS: opportunities beyond document outsourcing and Infosys partners with WPP for business platforms). The convergence of B2B and B2C will continue to fuel this demand.