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Concur Becomes A Consolidator

Posted on Monday, Feb 7th 2011

Last quarter, we saw how SaaS companies Concur (NASDAQ:CNQR) and NetSuite (NYSE:N) were on a growth track but had yet to get on to the consolidation path. But where there is growth, consolidation follows. And sure enough, Concur recently announced plans to acquire TripIt, a mobile trip manager, for about $120 million.

Concur’s Financials
Concur is a SaaS provider in the niche area of expense management and has annual revenue of $292.9 million. In its first quarter results, the company reported revenue of $80.2 million, up 19% y-o-y and 4% q-o-q. Net income was $3.7 million, or $0.07 per share, down from $6.4 million, or $0.12 per share last year. Cash and investments, net of customer funding liabilities and debt, increased approximately $5.2 million by quarter end to $606 million.

Concur expects second quarter revenue to increase 15.5% y-o-y. It expects the fiscal year 2011 revenue growth rate to be higher than the fiscal 2010 revenue growth rate. The company expects second-quarter EPS of $0.24 versus analyst estimates of $0.20.The stock is trading around $51.35 with market cap of about $2.7 billion. It hit a 52-week high of $55.49 on January 18.

Chart forConcur Technologies, Inc. (CNQR)

Concur’s Expansion Moves
Last month, Concur announced its plans to buy TripIt for $82 million in a cash and stock transaction. Evelyn M. Rusli of the New York Times reports that depending on the price of Concur’s stock over the next 30 months, the company may also pay up to $38 million in cash to shareholders of the privately held TripIt, taking the value of the deal to $120 million.

TripIt helps users to organize and share their travel plans or itineraries through mobile phones or the Web. Along with the itineraries, TripIt provides relevant data like weather forecasts and maps. TripIt’s open platform taps into a vast reservoir of third-party innovation, integrating applications from over 700 partners to provide compelling value for business travelers while they are on the road. This acquisition will help Concur to expand its mobile strategy. In August, Concur announced significant enhancements to its mobile platform, including closer integration with third-party applications from partners like Amtrak and OpenTable.

Robin Wauters on Tech Crunch says

“It’s quite a good exit for the company when all the smoke clears, having raised just a little over $13 million in funding to date. Investors include O’Reilly AlphaTech Ventures, European Founders Fund and Azure Capital Partners.”

Apart from this acquisition, Concur is also considering joint ventures to expand internationally. Concur recently signed a definitive agreement to establish a new joint venture in Tokyo, Japan, known as Concur Japan. With investment from SunBridge Corporation, the firm responsible for the Japan joint venture, and Marc Benioff acting as a minority direct investor, Concur says this joint venture positions the company to meet the demands of the increasing number of corporations in Japan and throughout Asia that are turning to cloud computing and mobile solutions to help them control expenses. Concur also plans establish Concur India in the first half of the fiscal year.

NetSuite’s Financials
NetSuite, a SaaS ERP vendor that makes Web-based business to manage large amounts of data and customer-relationship management tools, reported fourth quarter revenue of $52.1 million, up 21% and net loss of $6.4 million or $0.10 per share compared to a loss of $6.5 million or $0.10 per share last year. Non-GAAP EPS was $0.04 versus analyst estimates of $0.04 on revenue of $51 million.

For the full fiscal year 2010, revenue was $193.1 million, up 16% and net loss was $27.5 million or $0.43 per share compared to a loss of $23.3 million or $0.38 per share in 2009.

NetSuite forecast 2011 non-GAAP EPS of $0.16 to $0.19 versus analyst estimates of $0.22. NetSuite said the roll-out of a revenue recognition rule would hurt gross margins in the segment in the first half of 2011. The stock is trading at $28.37 and hit a 52-week high of $30.36 on January 13. Its market cap is about $1.8 billion.

Chart forNetSuite Inc. (N)

Despite not being profitable on a GAAP basis, NetSuite has been lapped up by investors since it went public. A main reason, apart from its being a SaaS company, is that it has the backing of Oracle CEO Larry Ellison. Three years ago, when the SaaS story was just heating up, Larry Ellison was skeptical about the profitability of the business model. Profitability is low in the early stages, but SaaS companies have proven that profits eventually kick in.

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