Posted on Wednesday, Jan 7th 2015
Last year, we began tracking some Unicorn companies – essentially organizations with billion dollar plus valuations – inspired by a TechCrunch article by Aileen Lee of Cowboy Ventures. Some of these Unicorn companies went public last year and have reasserted their high valuations. One such company on my radar is digital marketing solutions provider Marketo (Nasdaq:MKTO). The case study of the company’s founding and entrepreneurial journey is featured in my new book, Billion Dollar Unicorns.
Marketo began in 2006 with the intentions of becoming a high-velocity SaaS company focused on Lead Nurturing. Their founder and CEO Phil Fernandez began his professional life as a computer programmer. He worked at several organizations that went from being venture funded startups to becoming publicly listed organizations. By 1996, he had narrowed down on the idea of creating a digital company that would democratize the CRM process and be able to make an organization’s sales team at least five times more effective and help drive 40% revenue growth through Lead Nurturing. As Phil puts it, Lead Nurturing is a scaleable way of managing a lead from the date the marketer meets a potential customer until the date the customer is ready to buy.
They began attracting customers by offering high quality content including blog posts, whitepapers and research notes. In my discussions with Phil in 2011, he mentioned how they attracted customers.
“We did not have anything to sell, but we had resources for people to register and give us their contact information. As the product got closer, we started doing our own webinars and gave people some sneak previews of what was coming. We became our own beta user. We adopted content drive and social driven marketing strategies, and we did for ourselves what we do for our customers now. The day our product was ready for launch he was able to give our sales people 50 names of potential buyers.”
Through his initial associations, Marketo was able to raise $108.4 million in venture funding from investors including InterWest Partners, Institutional Venture Partners, Storm Ventures, Mayfield Fund, and Battery Ventures before it went public in 2013 by raising $75 million. Today the company is trading at a valuation of $1.4 billion. Marketo’s valuation has been hovering around the $1 billion mark ever since they went public.
Marketo has recently ended their fourth fiscal quarter, but the results are still awaited. Last October they announced third quarter results and the quarter’s revenues grew 54% over the year to $39.3 million, significantly ahead of the Street’s target of $37.5 million. Adjusted losses of $0.14 per share were also significantly better than the market’s forecast loss of $0.25 per share.
By segment, subscription and support revenues came in at $34.2 million compared with $31.2 million reported a quarter ago and $22.5 million reported a year ago. Professional services revenues increased 36% over the year to $5.08 million.
For the December ended quarter, Marketo projected losses of $0.26-$0.24 per share on revenues of $40.3 million-$40.8 million. The Street was projecting revenues of $39.6 million. Marketo expects to end fiscal 2014 with a loss of $0.76-$0.74 per share and revenues of $147.9 million-$148.4 million.
Marketo’s Growing Customer Base
Marketo’s success lies in their ability to attract customers efficiently while delivering high growth. Even when their product was in the Beta stage, Marketo had signed up 15 customers. Today, they continue to display similar zeal in attracting new customers. For the reported third quarter, Marketo had grown that number to nearly 3,500 customers worldwide. Recently they announced that Panasonic Systems Communications Company Europe deployed Marketo across 25 countries to help improve market penetration.
Last month, Marketo was also selected by VIF International Education, a leading provider of global education programs for K-12 schools, as their marketing tool to help build brand awareness. Some of the other recent customer additions include Rocky Brands and rFactr.
Marketo’s Expanding Products
Marketo continues to attract customers by improving their product offerings. Recently they released the upgraded Engagement Marketing Platform that successfully integrates the best practices of B2B and B2C marketing. The Platform features a single system of record that helps track customer marketing data, enables marketing automation by simplifying execution of marketing programs, providing real-time personalization, fully integrating the social networks, and providing real-time metrics on marketing performance.
The digital marketing space has seen consolidation in the recent past. Oracle acquired Eloqua and analysts expected Marketo to be the next possible take-over. Possible list of potential suitors included SAP and NetSuite. For now though, Marketo has managed to stay independent. Their stock is trading at $33.23 with a market capitalization of $1.4 billion. It touched a year high of $45.00 earlier last year.
While Marketo continues to expand their existing offerings, I am convinced that its next level of growth will come from inorganic moves. One potential target appears to be ON24, a leading provider of webcasting services. I believe the move will help Marketo grow adjacent capabilities and gain a strong foothold in the global webcasting and virtual events market. ON24 holds almost 28% of this market and was estimated to be operating a profitable business with annual revenue run rate north of $75 million. They generate leads, Marketo nurtures them. What could be a more logical fit?
More investigation and analysis of Unicorn companies can be found in my latest Entrepreneur Journeys book, Billion Dollar Unicorns. Unicorns will also be discussed with some special guests during our 1M/1M Roundtable programs over the next few weeks. To be a part of the conversation, please register here.
This segment is a part in the series : Billion Dollar Unicorns
. How Marketo Is Faring In The Public Market . Workday's Ramp to Multi-Billion Valuation . Gaurav Dhillon, Founder of Informatica and SnapLogic (Part 1) . ServiceNow's Expanding Market Opportunity . Gaurav Dhillon, Founder of Informatica and SnapLogic (Part 2) . Gaurav Dhillon, Founder of Informatica and SnapLogic (Part 3) . Gaurav Dhillon, Founder of Informatica and SnapLogic (Part 4) . Tableau's Valuation Increases to $6 Billion . A Rare Media Venture Called Vice . Gaurav Dhillon, Founder of Informatica and SnapLogic (Part 5)More »» . Gaurav Dhillon, Founder of Informatica and SnapLogic (Part 6) . Gaurav Dhillon, Founder of Informatica and SnapLogic (Part 7) . Will Box Implode Post IPO? . Net-a-Porter Cracks The Luxury Fashion Market . Outbrain Prepares for an IPO . Palantir's Skyrocketing Valuation May Be Justified . Online Education Player Lynda.com . Pluralsight's Impressive Rise . Snapchat Explores Revenue Generating Options . Analysts Project Revenue for Pinterest . The Market Awaits Etsy's IPO . Taboola's Content Marketing Growth . Egnyte Eyes IPO in 18 Months . Web 3.0 and E-Commerce Investment Thesis of 3 VCs . Cleversafe's Unique IP Strategy . Cloud Investment Thesis of 5 VCs . GoDaddy Shying Away from IPO, Yet Again . Can Square Sustain Its Valuation? . Zulily Tumbles . MuleSoft Will Be Joining Soon . Bootstrap First, Raise Money Later . ShopClues in India Shows Unicorn Characteristics . What Have You Learned? . ASOS Shines From London . Xiaomi Overtakes Samsung in China . eClinicalWorks Bootstraps With A Paycheck . Strategies From 5 Entrepreneurs . Lending Club Focuses on Growth Post IPO . Slack Speeds Its Way To The Mark . Eventbrite Shies Away from an IPO . Meituan Leads China's Group Buying Market . Gilt Groupe Delays IPO . Veeam Wants To Stay Private . Nextdoor's Valuation Skyrocketing With No Sign of Revenues . Stripe Exploring Tie-Ups for Growth . HubSpot Sustains Solid Growth Post IPO . Shazam Makes it to the Club . OnDeck Scoring in Small Businesses Instant Loans . Fat Startup Adaptive Insights Leading in Cloud CPM . Cloudera Leverages Open-Source Hadoop to Create a Multi-Billion Dollar Business . Evernote Cracks the Freemium Model . Rocket Fuel Crashes on Results . MongoDB Rises High on NoSQL Databases . Shopify Preparing for an IPO . JustFab Getting Ready for an IPO . Kabam to Stay Private? . Adyen Bootstraps to Multi-Billion Valuations . RetailMeNot Worries About Mobile Monetization . Elance-oDesk Taking on the Freelance World . Farfetch Connecting Designers with Consumers . The Impressive Story of Airpush . athenahealth Enters the EHR Market . Privalia Dominates the Latin America Markets . Niche E-Commerce Works for Fanatics . Powa Puts London on the Map . RealReal Shows How to Consign Luxury Products . Vancl On A Roller Coaster Ride . Didi Dache is China's Uber . Dafiti Leading E-Commerce in Latin America . ServiceNow Expands Addressable Market . Flipboard Focuses on Monetization . Hootsuite Eyes an IPO . GoodData Riding High on Big Data Analytics Market Growth . Cheetah Mobile Part Of Chinese Contingent . Hortonworks Needs To Deliver Results . Clarabridge Wins by Analyzing Customer Sentiment . Tableau Continues its Precise Execution . Will Cloudera Sustain $5 Billion Valuation Post IPO? . Freshdesk is a Prospect . InMobi Wants to IPO in India . Zendesk Targets the Live Chat Market . New Relic Getting Ready to Battle with Microsoft . Twilio is Revolutionizing Telecommunications . Funding Circle is UK's Latest Entry to the Club . Luxury Retailer Moda Operandi on the Club's Runway . Splunk is Now Targeting the SMB Segment . Capital-Efficient StartApp Is A Prospect . AppNexus In The IPO 2015 Pipeline . Druva Poised to Produce an Indian Unicorn . MapR Readies IPO . Lookout Getting Ready for an IPO . Anaplan Gets Ready to Enter the Club . Blue Apron Simplifies DIY Gourmet Cooking . GoFundMe Bootstraps till the Half-Way Point . Containers Gives Docker Entry into the Club . Can Kaltura Be A Public Unicorn? . The Ride-Sharing Industry Continues to Deliver Unjustifiable Valuations . MarkLogic Making Waves in Enterprise NoSQL . CloudFlare Offers Website Security over the Cloud . Mixpanel Provides Advanced Analytics for SMBs . Spotify Gearing up to Face Apple Music . Auction.com in Expansion Mode . Nutanix Gives VMWare Tough Competition . Houzz Bootstraps in a Niche Space to Join the Club . Rapid7 Delivers a Successful IPO . Coinbase Tries To Capitalize on BitCoins . Expect Acquisitions From ServiceNow . Zendesk and Freshdesk in Expansion Mode . Zulily Attempts to Make a Turnaround . Etsy Continues to Fumble . Lufax May be Risky, But Valuations Remain Lofty . Will IBM Acquire FireEye? . Mode Media Takes on Video Streaming . New Relic Moves Deeper into Enterprise . Delivery Hero Gets Multi-Billion Dollar Valuation for Food Delivery . Splunk Beefs Up Cyber Security . Garena Secures Singapore's Entry to the Club . Dianping is Thriving in China with its Local Reviews Business . Box Struggles in its Public Avatar . Coupang Raises the Banner for South Korea . InsideSales.com Bootstraps First, Raises Money Later . Pinterest Eyes E-Commerce . Klarna Takes the Risk out of E-Commerce . VNG Grows While Remaining Focused on Vietnam . Good, Bad and Ugly . Sprinklr Rolls up Social Media Management Software Before IPO . ContextLogic Marries Wish Lists to Vendors . Beepi Disintermediates Used Car Dealerships . Snapchat Experiments With Revenues . Tanium Simplifies Cyber Security . Avant is Revolutionizing Consumer Credit . Adyen is on a Roll . Apttus Ready for IPO . ZScaler Takes Security to the Cloud . Bullhorn is in the Making . Sogou a Unicorn, But Yet to Find its Mojo . Evernote Trying to Recover Lost Ground . Modernizing Medicine Is A Prospect . Instacart Looks Shaky . Mogujie's E-Commerce Pivot Pays Off . Zalando Takes the Lead in European Etail . BlaBlaCar Expands Internationally with Acquisitions . Square Files for IPO Below Last Round of Financing . Secretive Infinidat Makes its Way to the Club . FanDuel Creates a Billion Dollar Company out of Fantasy Sports . Kabbage Latest Unicorn in Slowing Online Lending Sector . Atlassian Now Prepping for a US Listing . Match.com Looking to Court the Stock Market Now . Ele.Me Shows Online-2-Offline Works . Alteryx is a Prospect . Machine Zone Translates Multi-Player Games to Multi-Billion Valuation . ZocDoc Should Be Able To Withstand Public Market Scrutiny . Thumbtack Joins the Ranks . Beibei the Baby of the Club . Online Lender SoFi Puts Off IPO Plans . Warby Parker Joins the Club . DraftKings Looks Worried as Fantasy Sports Come Under Scrutiny . Tujia Offers Vacation Rentals in China . Hortonworks Struggles to Stay in the Club . Atlassian, A Legitimate One, Delivers A Great IPO . Reconsider Your Aspirations . Will Docker Sustain? . Veeva Delivers Strong Fundamentals . OfferUp Still Needs to Figure out Revenue Model . Mozido Delivers Mobile Payment to Non-Banking Customers . SimpliVity a Prospect . WePiao Succeeds in Online Ticketing in China . Uptake Joins the Club . For Magic Leap, Unicorn Status No Longer Virtual . Udacity Leans on Industry Giants for Monetization . ForeScout Does Not Want To Go Public Yet . ShopClues Joins the Club . Age of Learning Monetizing in Educational Apps . Square Post Its IPO . Decolar is the Latin American Entry to the Club . Japan's Mercari Joins the Club . Yello Mobile Acquires its Way into the Club . TutorGroup Enters the Club . Souq.com the Middle East Entry to the Club . WeWork Riding the Sharing Economy Wave . Moderna Therapeutics A Promising, Unproven Bet . GitHub Faces Growing Pains . Africa Internet Group the First African Entry to the Club . Paytm Plans Rapid Expansion . Oscar Plans to Expand Its Network . Razer Leads the Gaming Accessory Market . GuaHao Targets China's Healthcare . AUTO1 Group Plans International Expansion . TransferWise Makes Money Transfer Simpler and Cheaper . Ping An Good Doctor Is Largest Chinese Healthcare Unicorn . MindMaze Channels Virtual Reality into Healing . Driverless Car Startup Zoox Joins The Club . Cylance Uses Machine Learning as Cyber Security Tool . SMS Assist Brings a Lackluster Industry to the Club . Unity Technologies a Strong VR Gaming Bet . Square Eyeing Large Sellers . Airbnb Continues to Soar . Xiaohongshu Leverages Social Commerce to Join the Club . iCarbonX Wants to Create a Digital You . Liepin, China's Homegrown Recruitment Platform . Hike is the Latest Entrant from India . Go-Jek Hails its Way into the Club . Quanergy Rides Into the Club . Aiwujiwu Rides High on Chinese Real Estate Sector . Zeta Interactive Counts on Inorganic Growth . Line Delivers a Successful IPO . Grab from Singapore is the Next Big One . Didi Chuxing Monopolizing Chinese Ride-Sharing Market? . Blippar Bets on Its Visual Browser . Two Years Post the IPO, Globant Continues to Soar . Nutanix Delivers a Strong Performance in the First Week of Listing . Coupa Has a Successful IPO . Online-to-Offline Focus Helps Huimin Enter the Club . Real Estate Platform Compass Joins the Club . LeSports Cashes in on Niche Video Streaming . Flipkart's Valuation Bodes Unsteady Future . Russian Avito Gearing up to go Public . Guazi Leading the Chinese Online Used Car Market . Slack Delays IPO to Next Year . Sprinklr Acquiring to take on Big Brands . Infor Accumulates ERP Providers to Build an Empire . Royole Corporation Flexes its Way into the Club . Rong360.com Joins the Club . Stripe’s Skyrocketing Valuation . Hulu Gears up to Stream Cable . Nutanix Delivers Upbeat Performance, Stock Still Down . Procore Joins the Club . JetSmarter Flies Into the Club . Opendoor Labs Opens the Door to the Club . Neo Technology Takes Databases to the Next Level . Kabam Struggles to Stay Alive . Careem is the Latest Middle East Unicorn . Huochebang is the Uber of Trucks in China . SimpliVity Exits in HPE's Arms . Kendra Scott Shows that Women CAN Build Unicorns . Zhihu Imitates Quora to Build a Valuation Without Revenue Company . Putting Flipkart's Struggles in Perspective . BlackLine Continues to Grow Post IPO . Global Switch Wants to be Leader in Data Centers . AppDynamics Sold Before IPO