Notes from the ExactTarget S-1 IPO Filing

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ExactTarget, one of the premier email marketing firms, just filed their S-1 for an IPO. Even as one of the largest SaaS companies in the world, ExactTarget has maintained an exceptional growth rate due in part of the execution of the management team, the continued overall market growth, and the power of the SaaS model. The wave of SaaS IPOs has truly arrived with Eloqua, Yelp, BazaarVoice, and more filing this year.

Here are some notes from the ExactTarget S-1 IPO filing:

  • Largest marketing SaaS salesforce with 285 reps (pg. 1)
  • 4,600 clients (pg. 1)
  • No client represented more than 5% of revenue (pg. 2) – question: which client pays them more than $7M per year?
  • Pricing is based on volume of contracted utilization, level of functionality, number of interactive marketing channels, number of users and level of customer support (pg. 2)
  • 1,100 employees (pg. 3)
  • $40 million annual R&D investment in 2011 (pg. 3)
  • 500 resellers (pg. 4)
  • Corporate culture cited as one of five competitive strengths (pg. 4)
  • Revenues (pg. 7):
    $72.3M (2008)
    $95.4M (2009)
    $134.2M (2010)
    $148M (2011 first nine months – on pace for 55% growth rate)
  • Profits/Losses (pg. 7):
    $3.6M (2008)
    ($2M) (2009)
    ($12.1M) (2010)
    ($29.2M) (2011 first nine months)
  • Accumulated deficit of $140M (pg. 9)
  • Two third-party data centers in Indianapolis and Las Vegas (pg. 13)
  • Significant portion of revenue is derived from clients in the retail and e-commerce, media and entertainment, travel and hospitality, financial services and insurance, technology, daily-deal and flash-sale industries (pg. 19) – amazing that daily deal sites are one of their named categories
  • Line of credit of $10M and long term debt of $7.5M (pg. 35)
  • Recurring subscription revenue by year (pg. 41):
    $53.8M (2008)
    $75.2M (2009)
    $106.4M (2010)
    $114.9M (2011 first nine months)
  • Recurring subscription revenue excludes revenue above the contracted amount as well as services (pg. 41)
  • Recently more clients have requested quarterly and monthly billing resulting in decreased deferred revenue (pg. 41)
  • Professional services are available for training, implementation, integration, deliverability, campaign services and strategic consulting (pg. 42)
  • Write off of $1.2M due to pulling their 2007 S-1 IPO filing (pg. 53)
  • 43 consecutive quarters of revenue growth (pg. 72)
  • 401 employees in sales and marketing (pg. 88) – since they have 285 sales reps, assume 30 in sales management, leaves approximately 85 people in marketing
  • Beneficial equity ownership (pg. 116):
    Technology Crossover Ventures – 25.8%
    Greenspring Associates – 17.8%
    Battery Ventures – 17.5%
    Scale Venture Partners – 7.1%
    Co-founder and CEO – 3.8%
    COO – 1.2%
  • Acquisitions (pg. F-17):
    Keymail Marketing LTD. acquired for $1.6M
    CoTweet acquired for $15.8M ($14.3M of which was goodwill, which is crazy high relative to purchase price)
    mPath Global Pty Ltd. acquired for $2M
    Frontier Technologia Ltda. acquired for $5.4M

The ExactTarget S-1 IPO filing was straightforward and didn’t have any surprises.

What else? What other thoughts did you have from the ExactTarget filing?

3 thoughts on “Notes from the ExactTarget S-1 IPO Filing

  1. I don’t think its that surprising that they mention daily deal sites, if you think about the number that exist and the sheer volume of email that they send e.g one/two emails per day per subscriber it doesn’t take long for the volume to really ramp up!

    The biggest worldwide I believe is groupon who has 142 million global subscribers (source: at one email per day per subscriber that’s 51 billion emails per year.

    I’m not suggesting for one minute that groupon use Exact Target but just demonstrating that Daily Deal sites represent huge volumes of marketing emails being sent and thus not surprising they are recognised as an industry within the IPO.

    Good an interesting article by the way, I’ve subscribed for future ones.

  2. S-1 filings are great – especially when comparing companies across the category. The losses are disappointing to see given the amount of revenue growth and capital infusions they have received.

    The R&D is healthy and continues to be critical for them as they broaden into social, sites and marketing automation. Their new HUB sets a noteworthy path for the foreseeable future but it will continue to demand heavy R&D dollars.

    The acquisition price on CoTweet gives a pretty clear view as to how much importance they place on the social space and how it will become integrated into their offerings.

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