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2017 IPO Prospects: Adaptive Insights Not Worried About the Oracle and NetSuite Merger

Posted on Tuesday, Jun 6th 2017

According to Gartner, the Corporate Performance Management (CPM) market is essentially made up of two key components: Financial CPM (FCPM), and Strategic CPM (SCPM). Gartner believes that 70% of organizations will benefit from additional business value generated from these services and will continue to invest in the market through 2020.

Adaptive Insights’ Beginnings

Adaptive Insights was founded by Robert Hull in 2003 who was looking for an easy-to-use cloud-based offering for financial management. As a CFO consultant, Rob had realized that most organizations use excel for financial modeling. He also realized that excel had very limited capabilities as a financial modeling tool and therefore the market needed a more flexible financial modeling offering that would be cloud-based and not involve complex deployment issues that come with products like Hyperion.

Within a year, Adaptive Insights, then known as Adaptive Planning, had released the first version of its product. The company focused on the SMB segment and developed a product that would help these businesses drive a real-time planning process through dashboards and performance metrics. Over time, the product has evolved to being one that caters to the end-to-end process of planning, consolidation, analytics, and reporting and is well-integrated with several ERP, CRM, and HR applications including products of NetSuite, Workday, and Salesforce.

Adaptive Insights’ Expanding Offerings

Meanwhile, the company continues to improve its product suite to expand market share. It recently released its first vertical-focused offering through a software industry initiative. It integrated its best practice models, KPIs, and industry benchmarks with the integrated planning and analytics products to release a solution that is optimized to accelerate and enable active planning for software companies. The new Software Planning & Analytics Solution will help software companies quickly and easily adopt an active planning process as they will be able to benefit from prebuilt, configurable models for topline forecasting, planning renewals, sales capacity planning, marketing demand generation modeling, KPI dashboards, and benchmark targets along with visual analytics and one-click SaaS board packs.

Adaptive Insights may have started as a financial planning solution, but today it also offers enhanced analytics capabilities. It is strengthening its analytic capabilities with the release of a next-generation visual analytics offering. The enhanced visual analytics feature will come with a new interactive dashboard that will allow for significant self-service analytics capabilities for finance and business users across the organization.

Adaptive Insights and Oracle

Adaptive Insights counts legacy CPM providers like Oracle and SAP as its traditional competitors. It believes that it is better than these bigger players because its offering is “easy, powerful, and fast”. But things have become a bit difficult for Adaptive Insights since Oracle announced the $9.3 billion acquisition of NetSuite. For nearly a decade, NetSuite had been a close partner for Adaptive Insights as NetSuite sold Adaptive Insights solutions in an OEM relationship. But with the acquisition, NetSuite will now need to sell Oracle products instead. To handle the issue, Adaptive announced that it has moved away from the OEM relationship with NetSuite to one of a referral partner.

Besides the change of status, the merger hasn’t scared Adaptive Insights too much. It continues to strengthen its integration with NetSuite. NetSuite customers will now be able to have a seamless user experience with the native integration built between the two solutions. Once integrated, Adaptive Suite will appear as a tab in the NetSuite ERP software to simplify access and use for both administrators and financial users.

Oracle’s merger does make Adaptive Insights a lucrative acquisition target for Salesforce and SAP. The acquisition will help these tech giants offer a pure cloud-based CPM solution. Another potential acquirer could be Workday, considering that Workday is already diversifying into financial management solutions.

Adaptive Insights’ Financials

Adaptive Insights earns revenues through a subscription-based model. It does not disclose detailed financials, but a report released earlier this year revealed that the company had surpassed $80 million in revenues in 2016. Its profitability figures are unknown.

Adaptive Insights has been venture funded so far with $177 million in funding received from investors including Salesforce, RBC Venture Partners, Norwest Venture Partners, ONSET Ventures, Bessemer Venture Partners, Information Venture Partners, JMI Equity, Cardinal Venture Capital, Monitor Ventures, Cardinal Venture Capital, and Relay Ventures. Its last round of funding was held in June 2015 when it raised $75 million in a round led by Bessemer Ventures, Information Venture Partners, Norwest Venture Partners, and ONSET Ventures at a $1 billion valuation.

The Unicorn round was expected to be the last one as the company prepared to go public, raising speculation that the company may finally list soon. Last year, Adaptive Insights also hired a new CFO Jim Johnson in anticipation of the listing.

This segment is a part in the series : 2017 IPO Prospects

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