Today, in what I consider a surprising move, French PLM and CAD vendor Dassault Systèmes announced the acquisition of French enterprise search vendor Exalead for €135M or, according to my calculator, $161M. Here is my quick take on the deal:
- While I don’t have precise revenue figures, my guess is that Exalead was aiming at around $25M in 2010 revenues, putting the price/sales multiple at 6.4x current-year sales, which strikes me as pretty good given what I’m guessing is around a 25% growth rate. (This source says $21M in software revenue, though the year is unclear and it’s not clear if software means software-license or software-related. This source, which I view as quite reliable, says $22.7M in total revenue in 2009 and implies around 25% growth. Wikipedia says €15.5M in 2008 revenues, which equals exactly $22.7M at the average exchange rate. This French site says €12.5M in 2008 revenues. The Qualis press release — presumably an excellent source — says €14M ($19.5M) in 2009 revenues. Such is the nature of detective work.)
- I am surprised that Dassault would be interested in search-based applications, Exalead’s latest focus. While PLM vendors have always had an interest in content delivery and life-cycle documentation (e.g., a repair person entering feedback on documentation that directly feeds into future product requirements) , I’d think they want to buy a more enterprise techpubs / DITA vendor than a search vendor to do so as in the PTC / Arbortext deal of 2005. Nevertheless, Dassault President and CEO Bernard Charlès said that with Exalead they could build “a new class of search-based applications for collaborative communities.” There is more information, including a fairly cryptic video which purports to explain the deal, on a Dassault micro-site devoted to the Exalead acquisition, which ends with the phrase: search-based applications for lifelike experience. Your guess as to what that means is as good as mine.
- I think those who position Exalead as “France’s Google” are misguided. Exalead was very clearly an enterprise software company that used its Internet search site as a demo of its capabilities, much as DEC long ago used AltaVista as a demo of the Alpha chip or Vivisimo (until the recent sale to Yippy) used Clusty as a demo of its clustering technology, or for that matter, as MarkLogic uses MarkMail as a demo of our XML server. In there ever was a European attempt at Google, it was Quaero, which I always viewed as the Airbus of search.
- A French investment firm called SCA Qualis owned 83% of Exalead steadily building up its position from 51% in 2005 to 83% in 2008, through successive rounds of €5M, €12M and €5M in 2005, 2006, and 2008 respectively. This causes me to question the CrunchBase’s profile that Exalead had raised a total of $15.6M. (You can see €22M since 2005 and the company was founded in 2000. I’m guessing there was $40M to $50M invested in total, though some reports are making me think it’s twice that.)
- The prior bullet suggests that Qualis took $133M of the sale price and everybody else split $27M, assuming there were no active liquidation preferences on the Qualis money.
- Given the European-focus, the search-focus, and the best-and-brightest angle (Exalead had more than its share of impressive grandes écoles graduates), one wonders why Autonomy didn’t end up owning Exalead, as opposed to a PLM/CAD company. My guess is Autonomy took a look, but the deal got too pricey for them because they are less interested in paying up for great technology and more interested in buying much larger revenue streams at much lower multiples. In some sense, Autonomy’s presumed “pass” on this deal is more proof that they are no longer a technology company and instead a CA-like, Oracle-like financial consolidation play. (By the way, there’s nothing wrong with being a financial play in my view; I just dislike pretending to be one thing when you’re actually another.)
- One wonders what role, if any, the other French enterprise search vendor, Sinequa, played in this deal. They, too, have some great talent from France’s famed Ecole Polytechnique, and presumably some nice technology to go along with it.
Here are some links to other coverage of the deal
- Press release
- Dassault micro-site, complete with odd video
- Qualis press release (PDF) which says 2009 revenue was €14M ($19.5M) and is presumably the most accurate source
- CrunchBase profile
- Sinequa CEO post which weighs in with profitability figures and the French taxpayer perspective
- IDC coverage from Sue Feldman
- Beyond Search coverage from Stephen Arnold
- EIWatch coverage from Adriaan Bloem