Microsoft has this week confirmed its acquisition of GitHub in a $7.5 billion all stock deal. Valued at $2 billion back in 2015, GitHub is Microsoft’s second-largest acquisition, having acquired LinkedIn for $26.2 billion in 2016. Of the 85 million repositories hosted on and 28 million developers contributing to GitHub, Microsoft is currently GitHub’s top contributor, after discontinuing their GitHub competitor, CodePlex in December of 2017. The deal is expected to close later this year.
Elsewhere in the world of enterprise SaaS, recently IPO’d DocuSign has surpassed earnings estimates in its first fiscal quarter as a public company, reporting revenues of $155.8 million (beating expectations by 7%) and subscription revenues of $148.2 million. Revenue as a whole was up 37% YoY, with the company’s largest revenue category, subscriptions, up 39% YoY. DocuSign’s stock jumped as much as 10% on Thursday after the strong earnings results statement, reaching an all-time high of $59.55 by close of Wednesday and again by midday today. Sign up to SaaS Mag for an exclusive interview with DocuSign founder, Tom Gonser on DocuSign’s road to IPO.
In other innovative tech news, Microsoft has sunk a data center off the coast of the Orkney Islands to test whether placing computers in the ocean can lead to better machine cooling, and thus reduce the energy required at underwater data centers versus conventional on-land data centers. While the computers will not be able to be repaired should they break, the hope is that the failure rate will be lower than when on land. If ‘Project Natick’ turns out to be a success Microsoft will be able to deploy groups of five such data centers in a matter of months.
E-commerce news this week saw Amazon’s stock price hit a closing high of $1,710.04 on Tuesday after a 21% climb. The jump followed SunTrust analyst Youssef Squali’s increase in his Amazon price target to $2,000 from $1,900 based on an optimistic outlook for Amazon’s private label business. According to Coresight Research, Amazon’s private label brands are the fourth most purchased clothing brand on Amazon, behind only Nike, Under Amour and Hanes. The bullish outlook on Amazon has been correlated with the increased demand on Amazon-related businesses, resulting in higher multiples and a view that it is currently an ideal time to be an Amazon seller. FE recently listed a $14.7 Amazon Vendor wholesale partnership business in the health and beauty niche enjoying impressive growth and over a decade of proven success. To request a prospectus, follow the link above.
Finally, a Facebook bug has recently been found to have changed 14 million users’ post settings to “public” for a period of four days in May. The mishap occured amid Facebook testing a new feature, and was rectified after a Facebook employee discovered posts were automatically suggested to be shared publicly. Posts which were made public due to the bug have been retroactively reverted to their intended settings.
New in SaaS business listings this week we have a $218K B2B digital sales and marketing business, with a popular brand in the Shopify App space boasting thousands of active merchants and an average App rating of over 4.5, earnings diversified across several Apps, over 10,000 active users and lean and simple cost structure. Also new in SaaS listings this week we have a $57.2K B2B product development business with mission-critical software with robust features, rapid growth with MRR rising c.150% over the past 12 months and low customer churn rate of c.5% over the past year, driving high LTVs of c.$700. If you are interested in either of these businesses, please follow the links to request a prospectus.
In events news this week, the FE team is attending StartupGrind in London on June 13, and then Founder Thomas Smale is off to SaaStr Europa 2018 in Paris on June 15, where FE will be hosting a networking happy hour event for clients on the evening of June 15. Click here to RSVP to the event, and if you will be in either area, respond to this email to set up a meeting!
Last week, we asked to hear your thoughts about LTV Conf US, and you delivered! One lucky survey respondent has won a ticket to LTV Conf US: Congratulations to winner Justin Bergen, who will be receiving a free ticket to the world’s premiere SaaS event this coming winter!
Continue reading below for more on Microsoft’s acquisition of GitHub, the data center Microsoft sunk off the coast of the Orkney Islands and Amazon’s recent stock wins.
- Popular and well-known brand in the Shopify App space with thousands of active merchants and an average App rating of over 4.5
- Earnings diversified across several Apps, driving operational synergies
- Over 10,000 active merchants on a free plan, creating plenty of upselling opportunities
- Lean and simple cost structure allowing for continuously strong and stable margins
Yearly net profit: $47,000
Asking price: $218,000
- Mission-critical software with robust features
- Rapid growth with MRR growing c.150% over the last 12 months
- Low customer churn rate of c.5% in the past year driving high LTVs of c.$700
- Multiple notable customers standing as a testament to the software’s popularity
- Highly automated product with minimal owner involvement
Yearly net profit: $26,800
Asking price: $57,200
In The News…
Microsoft Acquires GitHub
Microsoft has announced this week that they will acquire GitHub in a $7.5 million stock deal.
Most recently valued at $5 million back in 2015, GitHub will be CEO Satya Nadella’s second major acquisition for the company, second to Microsoft’s $26.2 billion acquisition of LinkedIn in 2016. GitHub is a large code repository service that houses code, documentation, and even entire projects for companies like Apple, Amazon, and Google among others. Structural reorganizational changes accompanying the acquisition include Xamarin Founder and a Microsoft VP Nat Friedman taking over as CEO of GitbHub, who will report to Microsoft’s cloud and AI Chief Scott Guthrie. Github’s current CEO and co-founder Chris Wanstrath will transition into a role at Microsoft as a technical fellow, similarly reporting to Guthrie. Microsoft had previously run its own GitHub competitor, Codeplex, which it discontinued in December 2017 and is currently the top contributor to GitHub. Of the acquisition, Nadella stated “We will accelerate enterprise developers’ use of GitHub, with our direct sales and partner channels and access to Microsoft’s global cloud infrastructure and services.”
Challenges present in Microsoft’s future with GitHub will likely center around the code repository company’s previous struggles with scaling and Microsoft’s history of difficulty leading its acquisitions, like Skype.
Amazon Stock Hits Intraday and Closing High
Amazon shares increased 1.45% following analysts’ optimism and reached an all-time intraday high, as well as closing high, on Monday of this week.
An analyst at SunTrust, Youssef Squali, has increased his price target to $2000 a share from $1,900, encouraging clients to buy the stock ahead of anticipated growth. Squali anticipates that Amazon’s private label business will generate revenues of $25 billion by 2022, stating “Amazon’s private label brands are the fourth most bought clothing or footwear ‘brand’ on Amazon.com, with only Nike, Under Armour and Hanes ranking higher.” Another SunTrust analyst echoes Squali’s optimism, noting that Wall Street does not give enough credit to Amazon’s private label venture. Squali states that the growing private label business should be strong enough to help push the stock more than 21% higher over the coming year. Amazon’s stock has gone up 42% this year, significantly outperforming the S&P 500’s 2.7% increase YTD. Private label ventures for Amazon have been bolstered by success in selling casual clothing items, electronics, everyday use apparel, and groceries with its acquisition of Whole Foods.
Amazon’s private label brands are the fourth most bought clothing or footwear “brand” on Amazon, following only Nike, Under Armour and Hanes, according to Coresight Research.
Microsoft Submerges Data Center off Orkney Coast
To test whether is will boost energy efficiency, Microsoft has sunk a data center into the sea off the coast of Orkney.
Microsoft has created a data center in the shape of a white cylinder with computers contained within, with the ability to sit on the sea floor for up to five years. Powering the center is an undersea cable bringing the data center power and delivering the information to the shore and the wider internet. A core issue with the proposal is that if computers onboard break, it will not be possible to repair them. To test the theory that the cost of cooling computers will be cut by placing them underwater, Microsoft has chosen Orkney due its standing as a major center for renewable energy research. According to Ben Cutler, the lead on “Project Natick,” the team suspects that cooling will be much better underwater than on land. Another key benefit is that because there will not be any people around the computers, Microsoft is free to remove all the oxygen and water vapor from the air, which will help significantly reduce corrosion. This will also hopefully contribute to there being a lower failure rate than on land, which will mitigate the fact that computers cannot be repaired.
If Project Natick is successful, Microsoft plans to sink groups of five cylinders that will be able to be deployed in 90 days.
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