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Pluralsight Banks on Acquisitions

Posted on Thursday, May 23rd 2019

According to a Global Markets Insight report, the global e-learning market is estimated to reach $300 billion by 2025 from $190 billion in 2018 driven by the adoption of the technology in the academic segment. Cedar Valley, Utah-based Pluralsight (NASDAQ: PS) is a leading player in the e-learning segment that continues to outpace market expectations.

Pluralsight’s Financials

For the recently reported first quarter, Pluralsight’s revenues grew 40% to $69.6 million, ahead of the Street’s forecast of $68.3 million. The quarter’s billings grew 41% to $77.9 million. The company continued to report losses and ended the quarter with a net loss of $33.5 million or $0.25 per share. On an adjusted basis, it reported a loss of $0.07 per share, compared with the market’s expected loss of $0.09 per share.

For the current quarter, Pluralsight expects revenues of $73.5-$74 million with a loss of $0.15-$0.13 per share. It expects to end the year with revenues of $312-$318 million and a loss of $0.42-$0.38 per share. The Street had forecast revenues of $72.4 million for the quarter with a loss of $0.08 per share and revenues of $311.8 million for the year with a loss of $0.28 per share.

Pluralsight’s GitPrime Acquisition

Pluralsight continues to deliver growth through acquisitions. Recently, it announced the $170 million acquisition of development team productivity tool provider GitPrime. Founded in 2015, Durango, Colorado-based GitPrime is a leading engineering intelligence platform. It had raised $12.5 million in two rounds from investors including OpenView Venture Partners, Y Combinator, and Data Collective DCVC. Valuation for the funding rounds is not known. Its annual revenue is estimated to be $7 million by Owler. GitPrime aggregates data from git repos, ticketing systems, and pull requests and transforms them into easy to understand insights and reports. By providing visibility into the software development process, GitPrime helps development teams of the organizations map initiatives and processes to outcomes.

Pluralsight has already built a robust skill assessment platform in the form of its Skill and Role IQ offering. GitPrime will further add to the platform and analytics by automatically aggregating a development team’s activity across all major code repositories and visualizing individual and team performance for tech leaders. Its software development analytics will help tech leaders understand team productivity, identify bottlenecks, and manage team performance. Through the acquisition, Pluralsight will be able to deliver an integrated skill measurement and skill development tool that is connected to every major code repository in use including Microsoft’s Github, Bitbucket, and Gitlab. Additionally, it will also provide a deep and analytical perspective into the efficiency and performance of a developer. The combination of Pluralsight and Gitprime will enable tech leaders to control their innovation lifecycle, including diagnostics, skill development, developer productivity performance, and the ultimate results.

This is Pluralsight’s ninth acquisition since being founded. It also happens to be its most expensive acquisition. Over the last 15 years, Pluralsight has focused on adding smaller, even bootstrapped, companies to its portfolio. Besides acquisitions, the company has also improved its product offering continuously. Recently, it released Q&A, a secure repository within the platform for team members to ask questions, and to connect them with the experts in their organizations to get answers fast. With Q&A, developers will be able to connect to the right subject matter expert, and get answers quickly. The enhancement will also serve as a growing knowledge database for the organization and allow users within the organization to search for previous answers.

Pluralsight has seen a meteoric growth in value. After being bootstrapped for nearly a decade, it had raised its first funding round in 2013. Overall, it raised $192.5 million through venture funding before going public in May last year. Its last round before listing had valued it at over a billion dollars. Last year, it raised $310 million through its IPO where it sold stock at $15 each and was valued at $2 billion. Currently its stock is trading at $33.49 with a market capitalization of $4.64 billion. Similar to other tech stocks, it too had fallen to a 52-week low of $17.88 in December last year.  It had climbed to a 52-week high of $38.37 in September last year.

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