Busy week in news, with giants Microsoft, PayPal and Amazon kicking off the tech earnings season and several high profile acquisitions in the tech space from Amazon and Atlassian.
Microsoft announced results this week, exceeding forecasts by posting revenues of $33.1 billion (+14% YoY growth). $10.8 billion of Microsoft’s revenue was attributed to the Intelligent Cloud Segment, with server products and cloud services growing 30% YoY and Azure’s revenue reaching 59% YoY growth.
PayPal also report positive quarterly earnings that landed just above analyst predictions. Quarterly revenue reached $4.38 billion (+19% YoY), while net income came in at a $492 million (+7% YoY). PayPal grew its active accounts base by 9.8 million users (+16%) to 295 million and grew payments volume by 25%.
Amazon’s earnings fell for the first time since 2017. Amazon’s spending on initiatives including one day delivery sent profits down YoY with another decline in earnings expected to occur in the upcoming holiday shopping season. Amazon’s reported third quarter profits came to $2.1 billion dollars or $4.23 dollars per share and share prices fell by c.7% on the news.
In acquisitions, Amazon has acquired the online health services API developer, Health Navigator. The company will be integrated with Amazon Care which is Amazon’s pilot healthcare service program for employees. This deal will mark Amazon’s second health startup acquisition following their purchase of the online pharmacy company, PillPack back in 2018 for just under $1 billion dollars. Elsewhere, Amazon also reminded Amazon Associate partners of its disclosure obligations under the Amazon Affiliate Operating Agreement, which requires affiliate partners to disclose sales commissions on their website. This may be a warning for a future crack-down!
Atlassian announced this week it has acquired CodeBarrel for an undisclosed price. Code Barrel is the Sydney-based development company responsible for one of the most popular low-code software tools in Atlassian’s marketplace, Automation for Jira. The Jira Software and Jira Service Desk add-on allows users to automate many aspects of the bug tracking and project management software system. The acquisition will rapidly enhance the overall automation capabilities in Jira, allowing users to save time and get back to the core functions of their businesses.
Elsewhere in SaaS, Databricks, a unified data analytics SaaS platform developed on open-source tools, has raised $400 million in a new round of funding. Valued at $6.2 billion in this latest round, the Databricks is self-reportedly one of the “fastest-growing enterprise cloud companies on record” and is likely aiming for a future IPO. With four products on the platform, the company most recently reported an annual run rate of $200 million as of Q3, and has raised nearly $900 million in lifetime funding.
The digital marketing world this week saw Facebook open search ad placement to all advertisers on the platform, a functionality which had previously been in testing mode only. This will allow advertisers to set Newsfeed Ads to reach users actively shopping through ads by appearing for search terms with commercial intent by either selecting “Automatic Placement” in users’ newsfeeds, or “Facebook Search Results” in Ads Manager in the creation of a News Feed Ad campaign.
New in FE exclusive listings this week we have a B2B CRM and Website Creation business in the Real Estate niche. Listed at $1.3M, this business has steadily climbed in popularity by providing a robust and intuitive all-in-one website creation and lead management system for real estate agents and brokers. This business has impressive SaaS metrics of steady MRR and low customer churn of c.2% over the LTM, high customer satisfaction with a 4.8/5 star rating, an impressive 21% CAGR YoY growth (2014 – 2018) and with a large team staying on post sale. If you are interested in this business, please follow the link above to request a prospectus.
In events news, the FE international team had a busy week at SaaStock Dublin and MicroConf EU. The SaaS Mag team announced that the SaaS 1000 list, which recognizes the fastest-growing SaaS companies in the world, will officially be an annual application from 2020 onwards. Attendees of both SaaStock Dublin and MicroConf Europe were the first to get their hands on the latest edition of SaaS Mag, titled: Gaining Your Market Advantage. There is still time to get a free copy shipped to you – visit SaaSMag.com to subscribe! Thomas Smale is currently at the Rhodium Weekend in Las Vegas. Feel free to get in touch to set up a meeting if you are in the area!
Continue reading below for more on Atlassian, Microsoft, PayPal, Databricks, Amazon and Facebook!
Listings
New
SaaS – B2B Real Estate CRM and Website Creation – $62K MRR
- Growing and authoritative B2B SaaS business in the real estate niche with over eight years of operating history
- Impressive SaaS metrics with steady MRR and low customer churn of c.2% in the LTM
- High customer satisfaction with a 4.8 star rating on both Google and Facebook
- Impressive 21% CAGR YoY growth from 2014 to 2018
- Trained team staying on with the business post-sale
Yearly net profit: $266,000
Asking price: $1,315,000
SaaS – B2B Sales & Conversion Rate Optimization Software – $20K MRR
- Scalable Shopify App with a firm foothold in the lucrative Sales & Conversion Rate Optimization niche
- Steady revenue growth with revenues growing at a c.83.4% CAGR over the period 2016 to (e)2019
- Glowing product reception with the App receiving a stellar rating on Shopify
- Expanding user-base with c.6,400 users
- Lean cost structure, driving high net margins of c.88.1% over the L12M
Yearly net profit: $207,000
Asking price: $922,000
SaaS – B2B customer Engagement & Location Services – $12K gross/mo
- Well-established B2B SaaS business in the Customer Engagement and Location Services Niche with over 10,000 lifetime users.
- Scalable Plugin/Shopify App with many five-star reviews.
- Regular customer base with hundreds of active users.
- Low owner involvement with strong margins and plenty of growth opportunities.
Yearly net profit: $124,000
Asking price: $510,000
Affiliate – Automobile & Motorcycle Accessory Reviews – $5.3K gross/mo
- Growing traffic profile with over 427,000 visitors over the L12M
- Dominant SEO presence with keyword rankings for c.32,000 keywords
- Strong content library of long-form content with an average article length of over 4,600 words
- Lean cost structure driving high net margins
Yearly net profit: $62,000
Asking price: $193,000
Sold
SaaS – Project Management & Time Tracking Software – $22K MRR – SBA Eligible
Affiliate – Automotive Repair Equipment – $2.1K gross/mo
E-Commerce – 8,000 Tier Amazon Merch – $1.9K gross/mo
In the News…
Atlassian Acquired Code Barrel
Code Barrel, the makers of Automation for Jira, have recently been acquired by Atlassian. Jira is Atlassian’s proprietary issue tracking software for bug tracking and agile product management and Automation for jira is a tool which allows users to automate tasks within the system with no need for custom scripts. The automation tool is sold exclusively through Atlassian’s marketplace and has a 6,000 plus customer base using over 40 million automation tools each month.
Microsoft Reports Strong Fiscal Q1 Earnings
On Wednesday, Microsoft reported fiscal Q1 earnings of $33.1 billion, growing 14% YoY. Earnings exceeded analysts’ expectations and the company predicts second quarter revenue will fall between $35.15 billion and $35.95 billion. Microsoft’s Productivity and Business Process Segment grew by 13% to 11.1 billion as a result of LinkedIn’s 25% revenue increase. Revenue generated from Microsoft’s Azure increased 59%, contributing to a 27% increase in Intelligent Cloud Segment growth.
PayPal Reports Positive Q3 Earnings
PayPal’s Q3 2019 earnings results came in above analyst predictions, primarily driven by the increase of 25% in total payment volume. Key increases included 19% growth in quarterly revenue year-on-year (to reach $4.38 billion), as well as the increase in active accounts by 9.8 million, for an overall growth of 16% to 295 million. PayPal has predicted that earnings for the full year will yield revenues of $17.7 billion for an earnings per share in the range of $3.06-$3.08. In terms of PayPal’s new competitors, Venmo processed over $27 billion in total payment volume int he same quarter, representing a growth rate of 64%.
Databricks Brings in $400M in Series F Funding
Databricks, the late-stage analytics platform startup received $400 million in a series F round of funding led by Andreessen Horowitz Late Stage Venture Fund on the back of a recent $6.2 billion valuation. With a likely IPO on the horizon for the late stage startup, investors showed significant interest with BlackRock Inc., Rowe Price Associates, Inc. and Tiger Global Management also contributing to this round’s funding. According to Tech Crunch, CEO Ali Ghodsi made a statement saying, “We are one of the fastest growing cloud enterprise software companies on record, which means we have a lot of access to capital as this fundraise shows.” The statement also confirmed going public is a strong possibility in the near future for the brand as revenue is steadily increasing. Databricks is a rapidly growing SaaS company providing a unified data analytics platform build on open-source tools, and after this series F round, will have acquired a total of nearly $900 million total in funding.
Amazon Associate Program FTC Compliance Plus Health Startup Acquisition
In FTC compliance news, earlier this week, members of the Amazon Associate Program were sent an email from Amazon regarding FTC disclosure requirements and Operating Agreements. According to OnFolio, the message urges associates to clearly disclose to their audiences which links are associated with the affiliate marketing program. In order to legally comply with the Federal Trade Commission’s regulations, link-level disclosures must be conspicuous and easily identified, including tags that can be as simple as #add, “(paid link)”, or #CommissionsEarned. Operating Agreements also require that sites utilizing Amazon affiliate links include a visible statement on their pages disclosing, “As an Amazon Associate I earn form qualifying purchases.” The notice was in response complaints submitted to the FTC regarding Prime Day promotions including Amazon links which were not clearly marked as paid endorsements.
Amazon announced this week their acquisition of Health Navigator, an online health services API developer which will be incorporated with Amazon’s pilot healthcare services program. In addition to PillPack, this will be the second health startup absorbed by Amazon Care. According to TechCrunch, Health Navigator was founded by Doctor David Thompson in 2014.
Amazon Earnings Drop for First Time Since 2017
Amazon’s profits for Q3 have shrunk YoY for the first time in two years. The company had been reporting recording record profits up until last year when spending on one day delivery serviced to Prime customers and a number of other initiatives began to have an effect on their earnings. According to Baird Equity Research analyst Colin Sebastia, “Significant investments tied to the rollout of one-day shipping will depress Q4 profits, we assume compounded by the shorter holiday shopping window.” Net revenue for the holiday quarter are predicted to be between $80 billion to $86.5 billion with operating income expected to fall between $1.2 billion and $2.9 billion.
Facebook Rolls Out New Search Results Ad Placement
Facebook is rolling out a new feature which places ads in search results giving advertisers a new way to reach specific audiences who, as Facebook puts it, are in the “discovery mindset.” According to Facebook, “brands’ audiences who saw ads across Facebook, Instagram, and Audience Network had 8x higher conversion rates than audiences only exposed to a single ad on Facebook.” Further research shows for mid-funnel brand metrics, opting-in to Marketplace in addition to Newsfeed ad placement, results in lower costs per incremental lift compared to Newsfeed placement alone.
When using Automatic Placements for ad campaigns, Facebook Search Results placement will automatically be included. Creators also have the option to manually opt-in when setting up a Facebook ad campaign. Ads opted-in for the placement will be visible in general and marketplace search pages and will be “contextually relevant to a limited set of English and Spanish search terms,” as reported by Facebook Business. They will look similar in appearance to newsfeed ads and are designed to blend in with the search results surface but will be marked as “Sponsored” as to indicate paid placement.