According to a Gartner research report, an organization spends nearly 2% of its payroll cost on traditional employee recognition expenses. A study conducted by IDC in 2012 estimated that the North America employee recognition market will grow 8% annually over the period 2011 through 2016. The market was worth $22 billion in 2011 and was projected to reach $32 billion in 2016.
The advancements in cloud and social computing have also influenced the employee recognition market. Dublin, Ireland-based, Globoforce, has become the leading social recognition services provider that has successfully leveraged the cloud and social tools in the market. Globoforce was founded in 1999 when co-founder Eric Mosley decided to build an online recognition platform that would help deliver memorable experiences to an organization’s employees around the world. But Globoforce went beyond traditional recognition programs and helped tie recognition to a company’s goals and values while ensuring employee engagement.
Their SaaS platform enables social broadcast of employee-to-employee recognition throughout the organization. Globoforce believes that the social recognition tools help clients drive business results. Additionally, Globoforce offers analytic capabilities that have previously been missing in recognition services. Their analytic and reporting tools provide organizations with information about their employees’ talent and culture by enabling organizations with enterprise social graphs, talent mapping, and interactive info-graphics. The service has also embraced the mobile world and offers a very intuitive web and mobile user interface.
As of June 2013, Globoforce’s client list included more than 80 companies with over 1.7 million users spread across 140 countries. Their offering is available in 25 languages and dialects to cater to this geographic diversity. Some of their clients are big names like Abbott Laboratories, CitiCorp North America, General Electric Company, and JetBlue Airways Corporation. General Electric is one of their biggest customers and for the first half of the previous year, the client accounted for more than 32% of their revenues.
Globoforce earns revenues through the transactions processed on their solution and for services rendered for their social recognition platform. They charge a transaction fee when their global e-commerce rewards network is used by their clients’ employees to redeem awards. Globoforce earns service revenues as it provides maintenance and support for website configuration, hosting, upgrades, and software functionality for award processing of the social recognition tool. Their revenues have grown from $100.0 million in 2010 to $157.7 million in 2012, translating to a 26% annual growth rate. Research and development and sales and marketing expenses have resulted in earnings of $3.1 million that have turned into losses of $1.8 million over this period. For the six months ended June 2013, Globoforce reported revenues of $84.3 million with a net loss of $3.2 million. Reward redemption revenues contributed $75.4 million for the quarter and solution and services revenues came in at $8.9 million. They ended 2013 with revenues of $187 million with a net loss of $6.5 million.
In November 2013, Globoforce had filed their S-1 with plans to list on Nasdaq under the ticker THNX. They were planning to raise $79 million by selling 4.4 million shares at $15 each. Last month, though, they scaled back these plans and are now looking to raise $53 million through the IPO. Globoforce believes that market conditions are not favorable for an IPO, and have delayed their IPO plans for now. The stock was initially expected to list last month.