With the financial markets buzzing over recent M&A activity and planned IPOs from high profile brands such as Responsys and LinkedIn, industry watchers are keeping a close eye on the next move for venture-backed players. In an interesting twist, Eloqua CEO Joe Payne revealed the company is already meeting with analysts and taking steps to prepare for a public offering.
“Great companies and great markets have a tendency to go public,” he said in an exclusive interview with DemandGen Report. “We believe that [the marketing automation space] is a viable and important market.” Payne also called the automation space an “inevitable market,” pointing out the direct impact the tools have on revenue generation. “We want to build our business so it’s attractive to investors,” he said. “That’s why we would point towards an IPO.”
Payne said that while Eloqua has not formally filed paperwork, the company has held briefings with various financial analysts and public investors about the future of the business. Rather than rush to be first to the public markets and tap into short-term peaks in market valuations, Payne said Eloqua has approached the idea of an IPO with care, to ensure that the company stands in the small-to-mid- cap category and avoids getting lost among micro cap stocks. “We think we should have a $400-$500 million valuation,” he said. “To get there, we probably need to make sure we have $100 million-plus in revenue.”
Payned predicted Eloqua will meet the $100 million-revenue mark in 2013 based on the company’s current subscription model and growth track.
Following the recent acquisitions of Aprimo by Teradata for approximately $525 million, and IBM’s acquisition of Unica for approximately $480 million, there was speculation that Eloqua would be the next logical acquisition target. However, Payne said the company could potentially be a buyer as well, as a primary objective for Eloqua is to add more technology that can further enhance the company’s existing product offering. “We want to equip the salesperson with more tools in their bags,” Payne said. “That can create more opportunities for us by being able to sell more to customers than what we do today.”
“Public” Knowledge = A New Visibility
While an IPO would add transparency to the marketing automation category, Payne noted that this can only help a business, as greater visibility fosters more confidence among prospective buyers. “Visibility helps with large enterprise customers who like to be able to look online at revenue figures, how much cash you have in the bank and what processes you have in place,” he said.
While Eloqua is currently a private company, they already publish GAAP revenue, customer account wins and best practices for an open approach among the marketing community. Payne said the company would be fine with exposing other details that come with an IPO, as Eloqua is already open both internally and externally.
Payne said the company continues its focus on organizational growth across the board. Even in 2009, a challenging economic time, Eloqua grew at about 20%. Coming off Q4 (which Payne said the company “crushed”), Eloqua has exceeded its target revenue mark and optimistically enters 2011 with new products and momentum around the concept of Revenue Performance Management. Payne forecasted the company will hit $68 million in revenue in 2011, all of which he said will be invested back into the company for further growth.
“The thing about being public that would help us a lot, is that it brings a visibility and a legitimacy to a market that doesn’t happen when everybody’s private,” he said. “I’m not sure if that’s fair or not, but a lot of companies, particularly in the US, believe the free market system works. If you’re able to build a great company and take it public and selling it to investors who spend a lot of time researching the market, then there’s probably something to it.”