Jive Software kicked off its JiveWorld conference this morning with a surprise announcement: ESW Capital has acquired the enterprise collaboration provider for $462 million in cash.
The move confirms what many analysts had predicted for Jive in the last few years: a buyout for a company whose value peaked at $1.7 billion in April, 2012 but has fallen to south of $500 million.
The Austin-based investment firm plans to bring Jive under its Aurea portfolio of companies. The acquisition will take Palo Alto-based Jive off the publicly-traded rolls and into the private sector again.
Jive, which had 595 employees as of its February annual report, reported a record $204.1 million in revenue for the year ending Dec. 31, 2016. However, this comes less than a year after Jive reduced its workforce 14 percent, laying off about 100 employees in a "realignment" last May.
CXM Meets Collaboration
Company officials did not dive deep into the financial impact in their statements today, however. Focusing on the technology implications of the deal, they reported confidence that Jive's employee-facing collaboration software will greatly complement Aurea's existing customer-facing customer experience management tools.
"Jive, in combination with Aurea, enables us to bring customer experience and employee and customer engagement together," Scott Brighton, CEO of Aurea, said in a statement. "We look forward to helping Jive clients get the maximum value out of their investment with Jive. Everything we do is driven by our singular core value of client success."
Jive was founded in 2001. It regularly was considered one of the enterprise collaboration software leaders by analyst firms along with other longtime players Microsoft, Salesforce and IBM, but faced increasing pressure as the social collaboration sector grew.
The Community Roundtable co-founder Rachel Happe had this to say in reaction to the news,
"Jive has been in a tough position as the social software market has grown, with both much bigger competitors and more niche vendors offering the market more options. Jive was also facing pressure to satisfy investors. Whether the acquisition by Aurea is good or bad remains to be seen. In a letter to customers very little information was provided."
Jive CEO Elisa Steele, speaking of the acquisition today, said Jive and Aurea "can deliver the superior end-to-end employee and customer experience companies require in today's digital landscape."
Aurea provides the technology platform and worldwide delivery capability that officials say enables companies to build, execute, monitor and optimize the end-to-end customer journey across a "diverse range of industries."
The acquisition left some questions as to the future direction for Jive. Aurea's previous acquisitions, including its purchase of email marketing provider Lyris software in May 2016, places it firmly in the realm of customer experience.
"Obviously we’ll learn more as the week goes on, but the main question is which audience will Jive focus on, internal employee collaboration or external brand/customer engagement. Aurea has a CRM offering that could provide value if integrated with Jive, helping it be more competitive versus Salesforce Community Cloud," Alan Lepofsky, vice president and principal analyst of Silicon Valley-based Constellation Research told CMSWire.
Technology strategist James Dellow expressed disappointment at the apparent mismatch between the two companies, noting Jive's history as one of the only independent social software vendors competing with Microsoft: "it's a little disappointing that they haven't become stable mates with someone that had a more obvious fit with Jive's story. Aurea will want Jive to make money, not change the world or beat Microsoft .... (but) plenty of other companies, like Igloo for example, are ready to try where Jive as an independent company failed."
Talk Social to Me founder Carrie Basham Young also expressed concern for Jive's robust partner ecosystem,
"One of the unanswered questions about the impact of this acquisition is around the robust ecosystem of consulting partners that have built their customization and advisory services for the Jive platform. Given Aurea's depth in software development and high touch customer service, Jive ecosystem partners may find themselves losing customers as professional services are brought back in-house."
From Highs to Lows
Talks of a Jive buyout are nothing new.
According to a 2015 Real Story Group report, Jive went from a peak of $1.7 billion in April 2012 but declined to about $400 million at the beginning of May 2015. The NASDAQ report today has Jive with a market cap of $417.1 million.
Last May, Jive cut 100 jobs, or about 14 percent of its workforce in what Steele called a "realignment plan" in Jive's first-quarter May 2016 report.
"Through our realignment plan, we will create a more disciplined go-to-market focus that better leverages our competitive differentiation," she said. "We will also restructure our organization to align with this sharper strategy and re-allocate resources to maximize our most promising opportunities. These actions are intended to help us improve revenue and enable us to reach sustainable non-GAAP operating profitability in the near term, while positioning us for growth over the longer term."
The Jive board voted unanimously to approve the deal.
The companies expect the acquisition to be completed in June 2017, subject to shareholder and customary regulatory approvals.