A couple of weeks ago, I blogged on the subject of valuations of public and private indirect procurement suites (here). Now, it appears there is a “new” kid on the block: Selectica (SLTC).
Selectica announced this morning that it had acquired b-pack for about $12.5 million in mainly stock. b-pack, according to the press release is a procure-to-pay vendor with $4-5 million in revenue, growing at low double-digit rates. Last year, Selectica acquired Iasta, a well-regarded e-sourcing vendor. Selectica had already been in the contract life-cycle management space since its origins in the bubble era. So, when the deal closes, at least on paper, Selectica will join the ranks of public, complete source to settle vendors.
In my prior post, I included a table comparing valuations of the indirect spend suites. As you can see below, I’ve updated the chart to include Selectica:
|Company||Valuation||LTM Revenue||EV/LTM Revenue||LTM Revenue Growth||Notes|
|SAP Acquistions||$15 billion (E)||$1.5 billion (E)||8-10x at time of acquistions||15-20%||All data at times of acquisition|
|Deem||$1.4 billion (E)||?||?||?||WSJ Valuation estimate|
|Sciquest||$0.5 billion||$101 million||4.8x||13%||Publicly traded|
|Basware||$0.6 billion||$143 million||3.9x||3%||Publicly traded|
|Proactis||$53 million||$16 million||3.4x||26%||Publicly traded (FY ended 7/14)|
|Coupa||?||$120 million (E)||?||100%||Company-provided growth estimate; my revenue SWAG|
|Selectica||$47||$18.5 million||2.5||33%E||Estimate for YE 3/31/15. Includes acquisitions.|
On the surface, Selectica would be a real steal, but Selectica loses quite a bit of money on a GAAP and non-GAAP basis. In addition, its year over year growth rate seems to be accounted for almost entirely by the Iasta acquisition.
In its investor deck, Selectica acknowledges its losses, but makes the case that it is turning things around. Selectica’s bottom line argument is the one made above: if we can turn this thing around, we are cheap relative to the market. At the bottom of the post, I’ve included the key slides from Selectica’s investor deck that make this case. (My emphasis on the if.)
I have watched Selectica for a long time. Selectica has one of the attributes I like when I consider value stocks in enterprise software (see here and here): it was a bubble-era darling that has since lost 99.64% of its value. (Sounds like a bad variation of the old Ivory soap ads!)
I think what Selectica is trying to do is fascinating, but not very easy: knitting together a full suite through small acquisitions. Sciquest is the best comparable in that regards. I’m going to watch this one closely, but stay on the sidelines for now.