Marketing automation software vendor Marketo has filed with the Securities and Exchange Commission (SEC) for a US$ 75 million IPO. If approved, Marketo plans to trade on the NASDAQ exchange under the symbol “MKTO.”
In its S-1 filing, underwritten by Goldman, Sachs & Co. and Credit Suisse, Marketo does not specify how many shares it intends to offer or at what price -- although it does anticipate having about 58.1 million shares of common stock outstanding after the IPO.
However, Marketo says that providing its solutions on a subscription basis generated revenue of US$ 14 million, $32.4 million and $58.4 million in 2010, 2011 and 2012, respectively, representing year-over-year increases of 131% and 80%, respectively.
The company also reports net losses of US$ 11.8 million, $22.6 million and $34.4 million in 2010, 2011 and 2012, respectively, due to increased investments in its growth. As of December 31, 2012, Marketo had an accumulated deficit of US$ 82.2 million.
In the S-1 filing, Marketo cites solution capabilities including driving faster revenue growth through enhanced customer acquisition, multichannel and personalized dialogues with customers and prospects, intuitive ease of use and deep analytical insight. Marketo says its competitive strengths include “progressive access to increasingly powerful features,” a tightly integrated and complete platform, enterprise integration with a wide range of solutions including Salesforce and Microsoft Dynamics CRM, thought leadership and an established network of 2,000 customers, 27,000 online community members and more than 100 partners the company calls the “Marketing Nation.”
Marketo intends to use proceeds from the IPO to fund growth. Specifically, this includes acquiring new customers, expanding the use of its marketing automation solution by existing customers, increasing its presence in the B2C market and certain industries, developing new applications, content and services and selectively acquiring compatible businesses and technologies (such as its April 2012 purchase of Crowd Factory).
Marketo does acknowledge risks including a history of losses, the lack of guaranteed future profitability, possible negative impact of not attracting new customers and achieving subscription renewals on future revenues, possible negative impact of maintaining a good relationship with Salesforce and other third-party solution providers and “significant competition from both established and new companies offering marketing software and other related applications, as well as internally developed software.”
VentureBeat - IPO Results Look Uncertain
A VentureBeat article on the Marketo IPO notes that the company has already raised $108 million in venture capital funding, including a $50 million round in November 2012 led by Battery Ventures.
VentureBeat seems to have mixed expectations for the IPO -- although the article mentions that IPOs of B2B companies such as Marin Software, Model N and Silver Spring all outperformed analyst expectations this year, it also raises Marketo’s dependence on Salesforce and Oracle’s recent Eloqua acquisition as possibly “harmful in the long term.”
Replacing ‘Mad Men’ with a Sane Marketing Approach
During a keynote presentation entitled “Getting from Good to Great Marketing” at the company’s November 2012 Marketing Nation virtual conference, Marketo Chief Marketing Officer Sanjay Dholakia made comments about the current state and future direction of the marketing industry that give some clue of where Marketo plans to direct its growth.
“There have been major tectonic shifts in marketing in the past 10-12 years,” said Dholakia. “You used to have to worry about one to two channels -- print and TV…It used to be marketing generated top of the funnel activities. It was ‘Mad Men’-style marketing of driving awareness and interest in the company and its products. The salespeople took over and did the rest."
Now, according to Dhokalia, the breezy, cocktail-infused approach marketers took in the 1960s has been replaced by an intensive approach where marketers actively collaborate with salespeople through consumer consideration, intent and evaluation and only hand off the process when it’s time to close a purchase.
“Seventy percent of the buying process occurs before someone talks with a sales rep,” said Dhokalia. “If marketing hasn’t been engaged the sale is probably already lost.”
However, Dhokalia said this situation actually gives marketers more control, citing a prediction from Forbes that CMOs will control more of IT spending than CIOs in five years and urging marketers to take more of a leadership role in enacting organizational change.
Presumably an infusion of IPO cash would partially go toward developing and/or acquiring new solutions to help marketers leave the 1960s behind and take a controlling role in engaging customers across all channels as early and as frequently as possible.