Marketing Tech Bellwether Posts Decent Q4 As Potential Suitors Line Up

Marketing technology remains the hot area for digital marketing right now - with increased M&A and investment in the space. Marketo is the public market bellweather for the martech space, given its complete focus on automated marketing. It posted its Q1 earnings late last night much in line with Wall Street estimates, sending the stock higher in after hours trading.

Highlights of fourth quarter of 2015:

- Revenue for the quarter was $58.30 million, an increase of 37.6% on a year-over-year basis
- Calculated billings were $68.1 million, an increase of 31 percent over $52.1 million in the same period of the prior year
- For the October-to-December quarter, the company reported net loss expanded to $17.2 million
- Its subscription remains relatively strong with a 37% increase year-on-year

The next big marketing technology acquisition

Marketo has strong capabilities in marketing automation with email marketing lead management and CRM integration being areas of strength for the company. Although many of the strategic buyers have acquired marketing technology over the last 12-24 months Marketo does look relatively cheap (market cap of just $600 million), and its tech would definitely complement competing solutions.

In 2013, Oracle bought Eloqua for $871 million and then ended that same year with a $1.5 billion acquisition of email marketing services provider, Responsys. Not to be outdone, Salesforce.com made a $2.5 billion acquisition of ExactTarget.

The company is growing but faces a huge task in taking on the big four of Adobe, Salesforce, Oracle and IBM. Its $33 million allocated to sales and marketing in Q4 demonstrates how competitive it remains on the customer acquisition front. By plugging into a scaled play like Microsoft, SAP or maybe NetSuite, Marketo's key products could grab more market share.

Stock Price

USD$15.70

- 0.46 (2.85%)
After-hours: USD$17.25 +1.55 (9.87%)