TIBCO Software Inc. today announced an agreement to buy Insightful Corp., a provider of statistical data analysis and data mining applications, for roughly $25 million (€16 million) in cash. The deal fulfills a promise TIBCO executives made in March, when they announced first-quarter financial results, that the company would make an acquisition move before long.
The definitive agreement, expected to close in the third quarter, is aimed at expanding TIBCO’s footprint in the business intelligence arena. The application infrastructure software provider took its first step into the BI market segment a year ago by acquiring Spotfire, Inc. for $195 million (€125 million) in cash. That acquisition has proved lucrative. In the first quarter, TIBCO reported that Spotfire accounted for more than half of the license revenue in the company’s business optimization line, adding $8 million (€5.1 million) to cash flow that quarter.
Now, TIBCO plans to add Insightful’s applications to its business optimization portfolio, complementing Spotfire’s Enterprise Analytics platform in particular, according to prepared statements from both companies. TIBCO’s product lines are grouped into three main areas: SOA technology, business optimization applications, and business process management tools. The company says it serves 3,000 customers worldwide.
The Spotfire and Insightful acquisitions demonstrate TIBCO’s shift in focus, according to AMR Research analyst Ian Finley. “They’re pointing their guns at data and how you analyze it as it flows through a high-volume environment” rather than waiting for it to arrive in a data warehouse for analysis, he said in an interview with Managing Automation. With this “stream computing,” approach, he added, TIBCO is allowing users to look at the “stream of data, rather than the oceans of data,” in real time.
In a letter informing customers of the agreement, Insightful President and CEO Jeff Coombs wrote that Spotfire has been “OEMing [Insightful’s] S-PLUS for several years. We believe the Insightful acquisition by TIBCO is a natural continuation of that relationship.”
Insightful reported revenue of $4.9 million (€3.1 million) for its first quarter, ended in March, down 21% from the year-earlier quarter, and a net loss of $0.4 million (€0.26 million), compared with a $1.1 million (€0.7 million), loss the year before.
Noting Insightful’s declining revenue and losses and the company’s heavy dependence on the financial services industry, Finley said of the takeover deal, “This was more of a white knight, distressed sale situation rather than a strategic battle.”
TIBCO remains one of the few stand-alone providers of application infrastructure software. Oracle, for example, purchased TIBCO rival BEA Systems in January. In announcing TIBCO’s first-quarter financials, CEO Vivek Randadivé tried to draw a distinction between software providers that offer enterprise applications in addition to middleware technology and TIBCO, which focuses solely on SOA and business optimization applications. “It’s good for us because customers want to go to a neutral party,” he told analysts. TIBCO rival Software AG has made similar arguments in the past.
Even so, TIBCO itself has been the subject of takeover speculation lately. Finley noted that if this latest acquisition proves successful, TIBCO could become even more attractive to possible suitors. “They have a juicy customer base and good quality product,” he said.
Meanwhile, TIBCO did not fare as well in the second quarter as in the first. Preliminary results, released on June 3, fell short of Wall Street’s expectations. TIBCO said it anticipates non-GAAP earnings of $0.05 to $0.06 (€0.032 to €0.038) per share on revenue of $146 million to $149 million (€93.5 million to €95.5 million). Analysts were expecting earnings of $0.07 (€0.045) per share on revenue of $151 million (€96.75 million) for the second quarter, according to a Reuters report. Ranadivé said TIBCO saw some deals slip late in the second quarter, and he noted, "Geographically, weakness was concentrated in the Americas," a region that was still showing strength in the first quarter.
The company will release its final Q2 numbers on June 26.
TIBCO, Spotfire, and Insightful officials declined to comment on the pending acquisition, citing SEC regulations. Until the deal closes, the two companies will operate independently, the companies said.