Marketo Doing Well Following IPO

According to Gartner’s Magic Quadrant for Multichannel Campaign Management (MCCM), digital marketing accounts for nearly 25% of an organization’s marketing spending. The researcher anticipates spending on customer relationship management software to grow 7.5% this year to over $14 billion.

Marketo’s Financials

Online marketing solutions provider, Marketo (Nasdaq:MKTO) announced its first quarterly results since a successful IPO. The company saw Q2 revenues grow 62% over the year to $22.5 million, surging past market projections of $14 million. Loss per share of $0.26 was also significantly ahead of the Street’s estimated loss of $0.49 per share.

By segment, revenues from subscription and support services grew 61% to $19.88 million. Professional and other service revenues grew 69% to $2.62 million. During the quarter, Marketo added 225 new customers, taking the total customer base to more than 2,590 organizations worldwide.

Marketo expects current quarter revenues to grow to $23 million-$24 million, with a loss of $0.23-$0.26 per share. It projects to end the current year with revenues of $89 million-$91 million, with a loss of $1.38-$1.50 per share. The Street was projecting revenues of $86 million for the year, with a loss of $1.46 per share.

Marketo’s Product Growth

Marketo continued to innovate with its products and recently launched several new product enhancements. For instance, it released a new Customer Engagement Engine that automatically manages the timing and distribution of content to the right audience at the right time. Unlike traditional marketing solutions that send out e-mail blasts to customers, Marketo’s Customer Engagement engine analyzes historical trend data to deliver more customized content. The system is also simple to implement as it uses a drag-and-drop mechanism to let marketers offer modified materials into automated Smart Streams that help manage content delivery.

Earlier this month, Marketo released a solution for Google’s new AdWords Conversion Import feature. Customers can now view conversion data from Marketo within Google AdWords and thus get analytics on clicks that were converted to qualified leads, opportunities, and new customer engagements. Using this new feature, marketers can now optimize AdWords campaigns and automatically improve the efficiency of AdWords spending based on conversion rates.

Online marketing solution service providers are operating in a very attractive market. Several technology giants have been acquiring digital marketing companies to expand their cloud-based offerings. Earlier this year, Oracle acquired Eloqua for $871 million, soon followed by Salesforce.com’s $2.5 billion acquisition of ExactTarget. Marketo offers a very attractive portfolio for acquisition by companies like SAP or Adobe, which may be interested in growing their presence in the online marketing solutions market as well. Meanwhile, Marketo’s stock is trading at $31.05 with a market capitalization of $1.18 billion. It touched a 52-week high of $39.80 in August 2013.