Jive Trading Near 52-Week Lows

An IDC report published earlier this year projects the worldwide enterprise social software market to grow from $1 billion in 2012 to $2.7 billion by the year 2017, translating to an annualized growth rate of 22%. Last year, IBM remained the leader with a 14% market share. Jive Software (Nasdaq:JIVE) came in second with a 10% market share.

Jive’s Financials

Jive’s quarterly performance has been strong. Q3 revenues grew 29% over the year to $37.4 million. But billings during the quarter have fallen from $38.9 million a year ago to $37 million.

By segment, product revenues grew 29% over the year to $33.5 million. Professional Services revenue grew 30% to $3.9 million. Non-GAAP net loss grew to $0.11 compared with $0.09 a year ago.

For the current quarter, Jive projects revenues of $38.5 million-$39.5 million, with loss of $0.15-$0.17. The company expects to end the year with revenues of $145 million-$146 million, with loss of $0.55-$0.57 per share.

Jive’s Cloud Growth

During the quarter, Jive continued to expand its cloud offerings. It released the upgraded Jive Fall Cloud, which offers a revamped social directory that will help users network with people with a particular expertise. The Cloud also features new social task system that lets people create and assign tasks, real-time communications options, and integrates seamlessly with apps like Google Drive and Gmail, including several other business applications.

It also introduced Jivex, a cloud version of its external community platform, which is best known for its ability to integrate with external social networks like Facebook and Twitter.

Jive is also expanding the range of its cloud products through strategic tie-ups. It entered into an agreement with Okta, which is in line with the agreement made with Box last year. The cloud-based identity management provider Okta will integrate its own Cloud Connect offering with Jive’s solutions to enable people access to a seamless, secure identity management and single sign-on to all business apps that are available on the Jive platform. In my earlier discussion with Okta’s CEO, Todd McKinnon, he said that Okta has the ability to connect more than 2,000 applications. Surely the service will add a lot of value to Jive. This service will be available free of cost to Jive’s customers. The tie-up will help Jive compete with Salesforce.com, which recently released its identity management product, Salesforce Identity. Similar to Okta, Salesforce Identity provides integrated identity services that let users access multiple applications using a single log-in.

Jive also remains focused on international growth, although the Americas are the biggest market for enterprise social software and accounted for 82% of the market. EMEA brought in 14%, and Asia Pacific and Japan markets accounted for 4% of revenues. Last quarter, Jive grew its presence in Europe by establishing a presence in Sweden, the Netherlands and Paris.

Jive also entered the Japanese market by offerings a customized, local version of the Jive platform. To help with sales in the region, Jive formed strategic tie-ups with TIS and Ricoh IT Solutions, which are leading Japanese resellers. TIS will sell Jive products within the region in verticals like the financial, manufacturing, and telecommunication industries, and Ricoh IT Solutions will resell Jive across industries.

The stock is trading at $10.97 with a market capitalization of $754.32 million. It touched a 52-week high of $18.48 in July, but has fallen drastically since.

Jive offers a strong value proposition with its ability to use the cloud to help employees connect and collaborate. But the stock has fallen on account of the slowing growth rates. Previous quarter revenue growth of 29% was the slowest annual growth that the company has ever reported as it tries to sell its product to more established players or “mainstream buyers.”