What Is the Destiny of Jive Software?

According to a report from researcher Ovum, enterprises are focusing on social networking within organizations as part of an effective enterprise collaboration strategy. IBM remains the market leader with revenues of more than $105.4 million in 2011. During the current year, Ovum projects the enterprise social networking market to be worth $500 million. The researcher estimates that at present, a mere 10% of organizations are deploying enterprise social networking solutions or services, suggesting a big market potential.

Jive’s Financials
Enterprise social networking platform Jive Software (Nasdaq:JIVE) saw Q3 revenues grew 39% over the year to $28.9 million. The Street was expecting revenues of $28.8 million for the quarter. The company reported a loss of $0.09 per share, which was also ahead of the market’s projections of a loss of $0.11 per share.

Revenues from products grew 32% over the year to $25.86 million, and revenues from professional services fell 9% over the year to $3.01 million.

For the current quarter, Jive projects revenues of $30 million-$31.5 million, with a loss of $0.15-$0.17 per share. The Street projects revenues of $31.1 million and a loss of $0.09 per share for the quarter. Jive expects to end the year with revenues of $111.1 million-$112.6 million and a loss of $0.44-$0.46 per share, compared with market projections of revenues of $112.2 million and a loss of $0.40 per share.

Jive’s Expansion Plans

As part of its expansion plans, Jive recently announced the acquisition of two smaller players for a sum of $7.6 million in cash and by issuing 460,000 shares which are priced currently at close to $6.9 million. It acquired Meetings.io, a San Francisco–based real time communication platform. Meetings.io’s solution enables people to create video and chat connections through a web browser. Video and chat meetings through the application come with features such as screen-sharing options. The platform is easy to download and access.

Jive also announced the acquisition of New York–based Producteev, a vendor of cloud-based social task management tools. Producteev’s solutions enable teams to collaborate on tasks by managing projects across multiple platforms. Teams can use Producteev’s products to schedule, assign, prioritize, and track tasks on a real-time basis.

Jive is also growing organically. It announced a partnership with Box to integrate Jive’s social business platform with Box’s content sharing and collaboration platform. Box’s solutions will be accessible on Jive Cloud, and users will be able to access files they store on Box through Jive. Users will also be able to upload, sync, and search for content directly on both Box and Jive systems.

Jive grew its geographic footprint and opened its first data center in Amsterdam to cater to the European market. During the year, Jive has improved its platforms in French, German, Italian, Spanish, Portuguese, and Russian translations. The company plans to add eight more European languages by the end of 2013.

The stock is trading at $13.17 with a market capitalization of $847 million. It touched a 52-week high of $28.15 in March 2011 and is still trading higher than its list price of $12.00 per share.

The enterprise social networking segment is seeing strong market traction. Earlier this summer, Microsoft acquired enterprise social networking services provider Yammer for $1.2 billion. The market is also hoping to acquire Jive at similar valuations. But for Jive to command such valuation, I believe that it will have to evolve. I agree with the views expressed by Podio’s management team in an interview earlier this year: for social platforms such as Jive to succeed, they need to evolve into rich, collaborative platforms. The company’s current collaboration with Box will help Box go beyond file collaboration and Jive by offering useful features.