[Updated and corrected 5/24/2013] The roll-up of mid-market, cloud-based customer engagement resources is accelerating. Today the Boards of Directors at both Genesys and SoundBite approved a definitive agreement for Genesys to buy all of SoundBite’s shares for $5.00 each (a total exceeding $100 million). The purchase price is a hefty premium over the $2.99/share price at the close of business on Friday and reflects the high expectations on the part of management for Genesys to move up the latter among companies in the $1.3 billion “Conversational Cloud” market space.

Genesys has been engaged in a long march toward an expanded cloud offering for some time now. It had already launched a home-grown Software-as-a-Service (SaaS) offering, Genesys Cloud Connect For Salesforce, when it made the decision to acquire cloud-based customer-care provider Angel from parent company MicroStrategy for a reported $110 million in February of this year. All told Genesys’ cloud-based businesses, including acquisitions, generate roughly $135 million. Given the growth rates in hosted customer care that figure could easily eclipse $150 million in the coming calendar year. That would approach the estimated revenue for category leader West Interactive (which had acquired Holly and Tuvox), and it would compare favorably to other top providers: Convergys (Interactive Voice Platform), [24]7 (which acquired both Tellme and Voxify) and Voxeo, as well.

The SoundBite acquisition augments Angel’s cloud-based clients and those supported by partners. It will bring Genesys’ total number of of cloud-based end-customers to 1,250 directly supported, plus uncounted clients whose applications are supported by hosting partners. The latter are those end-customers that are served by incumbent telco’s like Orange Business (France Telecom), Verizon Business, AT&T, BellCanada and CenturyLink (formerly Qwest). In other instances, Genesys may find itself selling against long-time go-to-market partners like EchoPass and Teletech. I almost forgot that a trifecta of long-time “pure plays” in the Voice-in-the-Cloud Universe collectively account for 25,000 ports worth of the Genesys Voice Portal (GVP) operating in their own clouds. They are Nuance on Demand, Voxify (as noted, now part of [24]7) and West.

SoundBite, now a public company, will be taken private by the Genesys acquisition. The last full year’s accounting of financial performance is represented by the 10-K form it filed with the United States Security and Exchange Commission (SEC) last March. In it, one learns that the firm’s top line revenue grew 10% per year between 2010 and 2012 (from $39.9 million to $48 million in 2012). However, during the lean years from 2008 to 2010, the revenues declined an average of 4.9% each year (from $43 million to $39.9). During that time, SoundBite never showed a profit. Its highest level of annual loss was $4 million in 2009, which has been trimmed to $1.8 million in 2012.

Prior to the this transaction, SoundBite had been conducting a roll-up of its own in the mobile marketing arena. Acquisitions and diversification fueled SoundBite’s revenue growth in 2011-2012. It acquired SmartReply in June 2011, which gave it the ability to add email and text messaging to its portfolio of “Proactive Customer Communications,” which were largely voice based, outbound notifications. In February 2012, the company acquired mobile marketing specialist 2ergo Americas (the U.S. based operations of the UK-based company). 2ergo Americas added  approximately $2.7 million  in 2012 revenue while SmartReply added around $5.8M in 2012 revenue. $2.7 million each to SoundBite’s top line. More importantly, they augmented the hosted voice services that were largely targeted to large contact center customers to include SMS, mobile coupons, QR code, and mobile web platforms.

Today, all these assets, platforms and customer lists belong to Genesys.

Categories: Articles

Tags: conversational commerce, hosted contact centers, outbound, mobile marketing