Net IQ Corp. sells WebTrends to investment company Francisco Partners
Francisco Partners, a private equity fund focused on technology companies, has agreed to acquire the WebTrends analytics business unit of NetIQ Corp., in a cash deal valued at approximately $94 million. The transaction leaves NetIQ Corp. to focus on its core integrated systems and security business and will allow WebTrends, as a freestanding company, to focus on further growing its presence in the fast-developing web analytics market.
A fit that was relevant when NetIQ Corp. acquired WebTrends approximately four years ago is less so now, says Greg Drew, general manager of WebTends, who will become CEO of the new company when the transaction closes, which is expected in June. At the time, says Drew, systems and security products as well as analytics products targeted the IT executive as their core customer. But today, “The web analytics market has evolved in that the new target customer for web analytics is really the business owner, the merchandising and marketing people,” says Drew.
Operating as a stand-alone company also frees WebTrends from some of the constraints under which publicly traded companies must now operate, says Drew. Complying with requirements such as the Sarbanes-Oxley legislation that sets out new rules for accounting and financial reporting is associated with both financial and management expense, he adds. “As a private company we will be able to stay focused on what the customer wants and not be as distracted by some of a public company’s obligations,” he says. “We think the combination of our market share, blended with the ability to be more nimble, is going to be a powerful combination.”
Web Trends currently has the largest share of the web analytics market, with revenues estimated at about $50 million. That represents about 18% of revenues at NetIQ Corp. About 70% of sales represent installed software, with the remainder in hosted web analytics services, but Drew sees that balance shifting to 50/50 in the near future with the hosted model now finding favor in industry sectors including retail and travel.
Long term, however, he believes that with experience, more enterprises, even in those industries, may give consideration to software installation, the model already more favored in industries such as financial services and healthcare. “As customers become more familiar with web analytics, they are going to want to integrate more with back-end systems. Some of those data elements are from systems that don’t have anything to do with web analytics,” he says. “Product cost data, for example, is highly proprietary and protected by merchants. They are not likely to want to shift that data anywhere, so whenever you have an interest in back end integration, software is usually considered a bit more strongly.”
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