Salesforce agreed to acquire ExactTarget Inc. (ET) for $2.5 billion last week, less than a month after Marketo sold shares to the public. Eloqua Inc., Marketo’s most direct rival, was bought by Oracle in February for about $935 million.
While Fernandez said that his company could be sold at the right price, the better route for its marketing automation technology is to partner with other cloud-software providers such as HootSuite Media Inc. for social-media management and Marin Software Inc. (MRIN) for managing online-advertising campaigns, he said. Because the software is delivered via the Web, it works with customer-relationship tools from Salesforce and NetSuite Inc. (N) without being owned or controlled by any of them.
“Our mission has been to be the independent innovator,” Fernandez said in an interview. “That’s the best way for this company to create long-term value.”
Marketo, based in San Mateo, California, had climbed 70 percent since its initial public offering on May 16, through yesterday. All of the gains came in its market debut, with the stock losing 4.4 percent since its opening-day pop. The shares fell 4.4 percent to $21.13 at 9:38 a.m. in New York.
Fernandez, 52, spoke in an interview at the end of company’s 25-day quiet period following the IPO.
With a market value of $810.6 million, Marketo trades for 12.3 times revenue during the past 12 months, higher than the 7 times price-to-sales ratio for Salesforce or the 7.9 times multiple Salesforce paid for ExactTarget. Marketo’s net loss widened in the first quarter to $9.52 million from $6.66 million because of rising sales and marketing costs, according to a May 16 filing.
Marketing automation, technology that helps businesses tailor and measure the effectiveness of their campaigns, is still a sub-billion dollar industry. The market will grow 50 percent this year to $750 million, according to Raab Associates Inc., a Chappaqua, New York-based research firm. The leaders are Eloqua, Marketo, Infusionsoft Inc. and HubSpot Inc., Raab said.
Fernandez sees a much bigger opportunity. He’s looking at the $1.5 trillion spent on marketing and the likelihood that companies will increasingly turn to technology to become more efficient in their spending.
“That produces a very big market,” he said.
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