Jive’s Intense Competitive Landscape

Recently MarketsandMarkets released a report, Enterprise Social Software Market – Global Advancements, Demand Analysis and Worldwide Market Forecasts (2013-2018), to track the growth of the enterprise social software market. The report estimates that the global enterprise social software market will grow from $721.3 million last year to $6.18 billion by 2018, recording growth of 45% annually. Growth will be driven by increased adoption of the tools by the high tech and telecommunications vertical. North America will hold the maximum revenue share in the market, and Asia Pacific will drive high growth in the market by region.

Jive’s Financials
Enterprise social services provider Jive Software’s (Nasdaq:JIVE) Q4 revenues grew 44% over the year to $32.5 million, ahead of the Street’s target of $31 million. By segment, quarterly product revenues grew 49% to $28.6 million, and professional services revenues grew 17% to $3.9 million. Jive ended the quarter with a loss of $0.14 per share, which was also better than the market’s projections of a loss of $0.15 per share.

They ended the year with revenues rising 47% to $113.7 million and a net loss of $0.43 per share, compared with a loss of $1.30 recorded a year ago. Revenues from the product division for the year grew 53% to $100 million, and services revenues were up 13% to $13.6 million.

During the quarter, Jive added 39 customers to their portfolio and now caters to more than 800 customers worldwide. Some of their new customers and extended contracts include relationships with Anglo American, AutoTrader.com and BMW Group, among others.

For the current quarter, Jive projects revenue of $33.5 million-$34.5 million, with a net loss of $0.15-$0.17 per share. The Street projects revenues of $34 million with a loss of $0.08 per share for the quarter. Jive expects current year revenues of $148 million-$153 million with a net loss of $0.53-$0.60 per share. The market expects revenues of $152 million with a loss of $0.27 per share for the year.

Jive’s Strategic Partnerships
After announcing a tie-up with Box earlier last quarter, Jive recently entered into a strategic relationship with PricewaterhouseCoopers. As part of the agreement, PwC US and Jive will jointly offer Jive’s social business platform and PwC’s consulting services to the enterprise market. The two companies will work together to implement Jive’s social business tools and subsequently help their customers derive benefits from the implementations by driving results for an organization’s employees, partners, and customers.

Jive estimates that their tools offer workforce productivity increases of up to 15% and revenue increases of up to 4%. Through the agreement, Jive’s customers will be able to benefit from both these efficiency improvement and PwC’s experience in organizational strategy and design. The services will be available in the U.S. market during the current year.

Jive is convinced that the strength of their products will help them sustain growth in years to come. Analysts also believe that Jive’s success make it a good acquisition target. Microsoft has already entered the space with the $1.2 billion acquisition of Yammer. Unlike several other recently listed stocks, Jive’s stock has managed to stay above its list price of $12.00. It is trading at $15.73 with a market capitalization of $1.01 billion. The stock touched a 52-week high of $28.15 in March 2012.

Jive’s Prospects

The company is one of the few independent players in the highly competitive enterprise social network space and competes against Yammer (now part of Microsoft), Chatter (from Salesforce.com), and Podio (Citrix), among others. It is not entirely clear to me what Jive’s competitive positioning is against these and other competitors, especially since Jive is priced higher than most others. Microsoft, for instance, recently lowered the price for Yammer to $3 per user per month from $15 per user per month. Yammer already has a freemium offering where users can sign up free for a limited-feature version. Jive, on the other hand, has a free 30-day trial version, after which users pay anywhere between $12 and $18 per month depending on the kinds of features they seek. In terms of future acquirers, Oracle and SAP come to mind.