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 Responsys (NASDAQ:MKTG)

Tuesday, December 31, 2013
Research

Message Board Alert from 12/31/2013

Oracle Corporation (NASDAQ:ORCL) filed a 13D disclosing a 20% stake in GeoBargain Responsys (NASDAQ:MKTG).  This development indicates that the takeout offer of $27.00 per share will likely go through as ORCL's ownership, combined with MKTG insider ownership of roughly 25% means the proposed merger will only require approval from 6% of the remaining shareholders for the deal to be consummated. At $27.64, shares are still trading above the take out price. We believe it is likely that shares will revert to $27 once the market begins to digest this new information.


Friday, December 20, 2013
Research

The GeoBargain Responsys (NASDAQ:MKTG) acquisition by Oracle Corporation (NASDAQ:ORCL) for $27.00 equates to a EV/Sales take out multiple of around 5 which is well below the take out multiples of other competitors recently acquired in the space.   Shares of MKTG are currently trading at above the take out price. We believe investors are speculating that the ORCL offer is to low and the possibility exist that ORCL will raise its offer.  Valuing MKTG at an EV/Sales of 8 would equate to over $30.00.

In related news, GeoBargain Vocus (NASDAQ:VOCS) shares are starting to gain momentum, possibly on the heels of MKTG news. Recall, in our 6/27/2013 article "Vocus (VOCS): Another SaaS Train About To Leave the Station" , we speculated that VOCS would be an ideal acquisition target with a price range of between $12.00 to $30.00.  We have taken a speculative long position in VOCS June $12.50 calls. 


Acquisition Activity

SAN BRUNO, CA--(Marketwired - Dec 20, 2013) - Responsys, Inc. (NASDAQ: MKTG) today announced that it has entered into an agreement to be acquired by Oracle for $27.00 per share in cash or approximately $1.5 billion, net of Responsys' cash.

The addition of Responsys extends Oracle's Customer Experience Cloud, which includes Commerce, Sales, Service, Social and the Oracle Marketing Cloud. By bringing together Responsys and Oracle Eloqua in the Marketing Cloud, for the first time CMOs that support industries with B2C or B2B business models will be equipped to drive exceptional customer experiences across marketing interactions and throughout the customer lifecycle from a single platform.

The Board of Directors of Responsys has unanimously approved the transaction. The transaction is expected to close in the first half of 2014, subject to Responsys stockholders tendering a majority of Responsys' outstanding shares and vested equity incentive awards in the tender offer, certain regulatory approvals and other customary closing conditions.

"Recognizing the unique needs of the CMO in B2B and B2C industries, the Oracle Marketing Cloud is now the only platform to unite enterprise-class leaders in these historically distinct marketing-automation fields," said Mark Hurd, President, Oracle. "Our strategy of combining the leaders across complementary technologies signifies Oracle's overwhelming commitment to winning and serving the CMO better than any other software company in the world."

"Responsys has always been focused on helping marketers realize their largest opportunity - coordinating their marketing touch points across channels, across the customer lifecycle, and across industries, and as a part of Oracle, we will only accelerate our efforts," said Dan Springer, CEO, Responsys. "Oracle not only shares our vision, but is the proven leader in bringing together best-in-class technologies and companies to realize the largest enterprise opportunities. We couldn't be more excited about what this means for our customers and employees."

"Oracle customers will benefit from continued R&D investment across the Responsys and Eloqua platforms, ensuring that CMOs in all industries are armed with a best-in-class solution," said Thomas Kurian, Executive Vice President, Oracle Development. "When combined with the full Oracle Customer Experience Cloud, for the first time, companies will be empowered to orchestrate individualized experiences that extend from Marketing, to Commerce, to Sales, to Service, to Support."


Wednesday, November 6, 2013
Comments & Business Outlook

Third Quarter 2013 Results

  • The company reported revenue of $51.7 million, a 27% increase from $40.5 million in the third quarter of 2012.
  • The company reported non-GAAP EPS of $0.03, compared to $0.06 for the same quarter 2012.

"Throughout 2013, we continue to benefit from marketers realizing they need to become much more sophisticated in their approach to digital marketing," said Dan Springer, Chairman and Chief Executive Officer of Responsys. "Marketers are looking to orchestrate the individual marketing interactions they have with their customers over time and across channels, and are realizing that Responsys is the only company with the technology and the strategy to help them get there. Our 27% year-over-year growth rate reflects this shift in the market, as well as our continued investment in our marketing orchestration platform and our sales and marketing engine."

Business Outlook

For the fourth quarter of 2013, the Company expects revenue to be in the range of $51.5 million to $53.5 million. Non-GAAP net income is expected to be approximately $0.04 per diluted share. Expected non-GAAP net income for the quarter excludes an estimated $0.2 million in amortization of acquired intangibles and an estimated $4.3 million of stock-based compensation expense. Non-GAAP net income per diluted share is based on estimated weighted average diluted shares outstanding of 56 million.

Responsys is increasing its outlook for fiscal 2013 revenue from a range of $195-198 million to a range of $201-$203 million as a result of new customer wins in the U.S. and international markets, as well as strong usage from existing customers. The Company is increasing its expectation for fiscal 2013 non-GAAP net income from approximately $0.15 per diluted share to approximately $0.16 per diluted share.

Non-GAAP net income for the full year excludes an estimated $1.8 million in amortization of acquired intangibles and an estimated $14.3 million of stock-based compensation expense. Non-GAAP net income per diluted share is based on weighted average diluted shares outstanding of 55 million.

Non-GAAP net income outlook for the fourth quarter and fiscal year 2013 assumes an effective non-GAAP tax rate of 32%.


Tuesday, August 6, 2013
Comments & Business Outlook

Second Quarter 2013 Results

  • For the second quarter of 2013, total revenue increased 25% to $49.5 million, up from $39.5 million in the second quarter of 2012.
  • Non-GAAP net income for the second quarter of 2013 was $1.1 million, or $0.02 per diluted share as compared with $1.4 million, or $0.03 per diluted share, for the second quarter of 2012.

"Responsys' strong second quarter performance is further recognition that the Company is a leader in orchestrating individualized experiences across digital channels, and at massive scale," said CEO Dan Springer. "Our continued investment in product innovation has allowed us to stay at the cutting edge of the industry, maintain a clear, competitive advantage for our customers, and increase the rate of return for their individualized digital marketing programs. We appreciate Gartner recognizing Responsys as a visionary leader in its 2013 Magic Quadrant for CRM Multichannel Campaign Management.

"We have a track record of anticipating emerging digital marketing trends, and our increased investment in sales and marketing is introducing Responsys to new customers and expanding relationships with existing ones," continued Mr. Springer. "We believe our investment strategy to expand the customer service organization and build our leading platform, the Responsys Marketing Cloud, will further extend our leadership position, support revenue generation and deliver enhanced value to stockholders."

Business Outlook

Based on information available as of August 5, 2013, Responsys is issuing guidance for the third quarter of 2013 and revising fiscal 2013 guidance as follows:

For the third quarter of 2013, the Company expects revenue to be in the range of $47.0-$48.5 million. Non-GAAP net income is expected to be approximately $0.02 per diluted share. Expected non-GAAP net income for the quarter excludes an estimated $0.2 million in amortization of acquired intangibles and an estimated $3.8 million in stock-based compensation expense. Non-GAAP net income per diluted share is based on estimated weighted average diluted shares outstanding of 55.1 million.

Responsys is increasing its outlook for fiscal 2013 revenue from a range of $190-193 million to a range of $195-$198 million as a result of increased traction with new customers, as well as strong usage from existing customers. The Company is revising its expectation for fiscal 2013 non-GAAP net income from approximately $0.18 per diluted share to approximately $0.15 per diluted share to reflect the increased investment in sales and marketing to continue to support the revenue growth and take advantage of significant market opportunities.

Non-GAAP net income for the full year excludes an estimated $1.8 million in amortization of acquired intangibles and an estimated $14.3 million in stock-based compensation expense. Non-GAAP net income per diluted share is based on weighted average diluted shares outstanding of 54.8 million.

Non-GAAP net income outlook for the fiscal year 2013 assumes an effective non-GAAP tax rate of 34%.


Friday, June 21, 2013
Research

Responsys (NASDAQ:MKTG) ($13.09) - JMP Securities raised the price target on GeoBargain MKTG from $14.00 to $18.00.  This supports our bullish thesis that the stock should rise, since it has been selling well below the EV/Sales multiple of two comparable public companies that were acquired in 2013 (ET and ELOQ).  JMP's price target coincides with the assumption outlined in our article that MKTG should be selling at a minimum EV/Sales multiple of 5.

On 2/22/13 we wrote our first article on MKTG, "Responsys Inc. (MKTG): Filling the Valuation Gap" when the stock was trading at $7.76.  We then coded MKTG as a GeoBargain on 4/11/13 at $8.97.  Most recently, on 5/6/13 we issued our follow up report "Responsys (MKTG): Last SaaS Standing" when the stock was trading at $10.80.


Monday, June 10, 2013
Investor Alert

On June 6, 2013, the GeoTeam published a follow-up to its original article on MKTG.

We originally highlighted MKTG in our third SaaS article, “Responsys: Filling The Valuation Gap”, published on February 22, 2013.   As was the case with our ET analysis, in our original article about Responsys we compared its low valuation (EV/S multiple of 1.8) to that of ELOQ and we expanded on why we thought that the pace of acquisition activity in the SaaS space is not expected to slow down anytime soon.

Please see the remainder of our bullish update on MKTG here. http://blog.geoinvesting.com/?p=6131

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Monday, June 3, 2013
Comments & Business Outlook

SAN BRUNO, CA--(Marketwired - Jun 3, 2013) - Responsys, Inc. (NASDAQ: MKTG), a marketing cloud software and services leader, has been recognized as a "Visionary" in Gartner, Inc.'s May 2013 "Magic Quadrant for CRM Multichannel Campaign Management" (MCCM) report. We believe being named a Visionary validates Responsys' proven track record in the market, and that the Responsys Interact Marketing Cloud has become one of the leading solutions for companies looking to more effectively manage their digital relationships and interactions across email, mobile, social, display and the web. This is the sixth consecutive time Responsys has been included in this prestigious evaluation of the leading multichannel campaign management providers.

"There's no question marketers are realizing that traditional campaign management solutions are no longer going to cut it when it comes to delivering highly personalized interactions at scale, and are therefore moving towards strategies and solutions that are more customer and digitally led," said Scott Olrich, President, Marketing and Platform at Responsys. "We consider being recognized as a 'Visionary' in the Gartner Magic Quadrant a testament to our consistent track record of re-thinking what a multichannel campaign management solution needs to be in the digital age."

Published by Adam Sarner, et.al. Research Director at Gartner, the Magic Quadrant evaluates vendors in the multichannel campaign management market based on their ability to execute and completeness of vision. Responsys was placed in the "Visionaries" quadrant of the Magic Quadrant, which Gartner describes as companies that "provide a strong vision for the campaign management market, or excel in advanced or emerging areas such as digital marketing."

According to Gartner, "Budgets for digital marketing are growing about twice as fast as the overall marketing budget and now represent about a quarter of total marketing spending. Gartner expects spending on CRM software to exceed $14 billion in 2013, with a growth rate of 7.5% -- marketing automation will achieve 11% annual growth. Digital marketing has sparked this growth because it enables new techniques that can grow revenue faster -- for example, inbound marketing, real-time marketing and data-driven marketing. In addition, new technologies, such as social and mobile, open not just new channels, but also new ways of engaging customers. Thus, marketers have to coordinate more channels and more kinds of campaigns."

Responsys' inclusion in Gartner's 2013 "Magic Quadrant for CRM Multichannel Campaign Management" (MCCM) report builds on the company's impressive standings in other recent market research evaluations, including being named a "Strong Performer" in "The Forrester Wave™: Cross-Channel Campaign Management (CCCM), 2012" report, and a "Leader" in "The Forrester Wave™: Email Marketing Service Providers, 2012" report.


Monday, May 6, 2013
Comments & Business Outlook

First Quarter 2013 Results

  • For the first quarter of 2013, total revenue increased 27% to $48.5 million, up from $38.1 million in the first quarter of 2012.
  • Non-GAAP net income for the first quarter of 2013 was $3.7 million, or $0.07 per diluted share as compared with $3.5 million, or $0.07 per diluted share, for the first quarter of 2012.

"Our outperformance in the first quarter demonstrates the value that customers place on our differentiated solutions, and we are confident that our growth will continue to be driven by the success of our customers," said Dan Springer, Chairman and CEO. "The strong volumes of digital messages sent by our customers and the higher than anticipated demand for our professional services from new and existing clients were the key revenue drivers this quarter. We believe our ongoing investment in innovation has allowed us to pioneer market-leading products that provide our customers with competitive advantages.

"During the first quarter, we introduced enhancements to the Responsys Interact Suite, including Responsys Interact Preference, a new offering that provides marketers with a unified, cross-channel view of customer preferences and permissions," continued Mr. Springer. "Our new product introductions and investments in our premium platform are focused on enabling our customers to generate the highest return for their customized digital marketing programs. We have a track record of anticipating emerging trends, and we intimately understand the needs of marketers. We believe we are well-positioned to deliver strong financial results throughout the rest of 2013 and beyond."

Business Outlook

Based on information available as of May 6, 2013, Responsys is issuing guidance for the second quarter of 2013 and revising fiscal 2013 guidance as follows:

For the second quarter of 2013, the Company expects revenue to be in the range of $45.5-$46.5 million. Non-GAAP net income is expected to be approximately $0.02 per diluted share. Expected non-GAAP net income for the quarter excludes an estimated $0.7 million in amortization of acquired intangibles and an estimated $2.9 million in stock-based compensation expense. Non-GAAP net income per diluted share is based on estimated weighted average diluted shares outstanding of 53.6 million.

Responsys is increasing its outlook for fiscal 2013 revenue from a range of $188-$192 million to a range of $190-193 million. The Company is revising its expectation for fiscal 2013 non-GAAP net income from approximately $0.16 to $0.18 per diluted share to approximately $0.18 per diluted share. Non-GAAP net income for the full year excludes an estimated $1.8 million in amortization of acquired intangibles and an estimated $12.2 million in stock-based compensation expense. Non-GAAP net income per diluted share is based on weighted average diluted shares outstanding of 54 million.

Non-GAAP net income outlook for the fiscal year 2013 assumes an effective non-GAAP tax rate of 35%.


Friday, March 22, 2013
Investor Alert

On February 22, 2013, we made our research report, "Responsys Inc (MKTG): Filling the Valuation Gap", available to our Premium members.  An excerpt states:

In light of our ongoing coverage of SaaS companies, we have now widened our focus to include Responsys Inc. (NASDAQ: MKTG). A clue which leads us to believe that MKTG may be telegraphing itself as an acquisition target exists in information disclosed in a January, 11 2013 8K (a related press release has not been issued).  We mentioned this fact in our January 16, 2013 Seeking Alpha article and disclosed that we went long MKTG shares to our premium members in a January 14, 2013 (see January 22, 2013 research note on GeoInvesting for more details).

Please see our entire report here.

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Friday, February 22, 2013
Research
On January 14, 2013 we added MKTG to our open long positions mainly because of a 8k filed on January 11, 2013 where the company announced a "change in control plan."  Basically the company approved a "poison pill" to prevent a hostile takeover by other companies.  We also informed premium members that we went long MKTG on January 14, 2013 and mentioned the poison pill development  in our Exacttarget and E2 Open article from January 15, 2013 as another SaaS company trading at a low price to bookings ratio.

Thursday, February 21, 2013
Comments & Business Outlook

Fourth Quarter 2012 Results

  • For the fourth quarter of 2012, total revenue increased 19.9% to $44.7 million, up from $37.2 million in the fourth quarter of 2011.
  • Non-GAAP net income for the fourth quarter of 2012 was $3.7 million, or $0.07 per diluted share as compared to $3.3 million, or $0.06 per share on a non-GAAP diluted basis1, for the fourth quarter of 2011.

"Our strong fourth quarter financial results reflect our success in helping brands transform the way they interact and build relationships with their customers across the digital channels," said Dan Springer, Chairman and Chief Executive Officer of Responsys. "As digital marketers shift away from mass marketing to creating individualized experiences for each customer, we're poised to lead the market with the industry's only interaction management platform that puts the customer first, not the campaign."

Business Outlook

Based on information available as of February 20, 2013, Responsys is issuing guidance for the first quarter of 2013 and fiscal 2013 as follows:

Fiscal 2013 revenue is expected to be in the range of $188-192 million. Non-GAAP net income is expected to be approximately $0.16 to $0.18 per diluted share.

Non-GAAP net income for the full year excludes an estimated $1.8 million in amortization of acquired intangibles and an estimated $12.5 million in stock-based compensation expense. Non-GAAP net income per diluted share is based on weighted average diluted shares outstanding of 54 million.

For the first quarter of 2013, the Company expects revenue to be in the range of $43-$45 million. Non-GAAP net income is expected to be approximately $0.05 per diluted share. Non-GAAP net income for the quarter excludes an estimated $0.7 million in amortization of acquired intangibles and an estimated $2.9 million in stock-based compensation expense. Non-GAAP net income per diluted share is based on estimated weighted average diluted shares outstanding of 53.6 million.

Non-GAAP net income for the first quarter and fiscal year 2013 assumes an effective non-GAAP tax rate of 33% and 35%, respectively.


Monday, November 5, 2012
Comments & Business Outlook

Third Quarter 2012 Results

  • For the third quarter of 2012, total revenue increased 19.6% to $40.5 million, up from $33.9 million in the third quarter of 2011.
  • Non-GAAP net income for the third quarter of 2012 was $3.0 million, or $0.06 per diluted share as compared to $2.6 million, or $0.05 per share on a non-GAAP diluted basis1, for the third quarter of 2011. 

"We had a strong quarter for new business wins and delivered EPS at the top end of the range, underscoring the positive results we are seeing from our increased investment in sales and marketing. We believe these results and increasing traction in emerging channels bode well for our continued progress in 2013," said CEO Dan Springer. 

Business Outlook

Based on information available as of November 5, 2012, Responsys is issuing guidance for the fourth quarter of 2012 and fiscal 2012 as follows:

Fiscal 2012 revenue is expected to be in the range of $160-161 million. Non-GAAP net income is expected to be approximately $0.20 per diluted share.

Non-GAAP net income for the full year excludes an estimated $2.7 million in amortization of acquired intangibles and $6.5 million in stock-based compensation expense. Non-GAAP net income per diluted share is based on weighted average diluted shares outstanding of 53.4 million.

For the fourth quarter of 2012, the Company expects revenue to be in the range of $42-$43 million. Non-GAAP net income is expected to be approximately $0.05 per diluted share. Non-GAAP net income for the quarter excludes an estimated $0.8 million in amortization of acquired intangibles and $1.8 million in stock-based compensation expense. Non-GAAP net income per diluted share is based on estimated weighted average diluted shares outstanding of 53.6 million.

Non-GAAP net income for the fourth quarter and fiscal year 2012 assumes an effective non-GAAP tax rate of 40%.