Seeking to bring together commerce tools and marketing capabilities in a single cloud-based software offering, NetSuite is acquiring marketing software company Bronto Software in a $200 million cash and stock deal.
The software platform of Bronto, a privately held Durham, NC, company, automates marketing campaigns and provides tools and analytics intended to help its customers boost their reach and, ultimately, their sales. San Mateo, CA-based NetSuite (NYSE: [[ticker:N]]) offers cloud-based software that helps enterprise companies manage their businesses, resources, and customers.
NetSuite has also been making a big push into commerce. Its SuiteCommerce software manages tasks such as orders, invoicing, and shipping. Speaking on a conference call with analysts, CEO Zach Nelson said that he sees Bronto’s marketing capabilities as a missing piece. While NetSuite can manage commerce transactions, Bronto gives insight into customer behavior.
“You’re only a click away in a marketing campaign from actually buying something,” Nelson said, speaking from Bronto’s downtown Durham headquarters. “So marketing and commerce—while they used to be very separate things, the channels were very separate—have become a tightly integrated thing.”
The companies will need to integrate their offerings, of course. NetSuite expects to complete the Bronto acquisition—$100 million in cash and the other half in NetSuite stock–in early June. The deal represents NetSuite’s largest acquisition measured in total dollars.
Nelson said NetSuite had been seeking a marketing automation acquisition for the past year, before entering talks with Bronto about six months ago. When the deal closes, Bronto will continue to operate in Durham as an independent NetSuite subsidiary. Nelson said that NetSuite is keeping Bronto’s 230 employees, consistent with its practice in previous acquisitions. He added that NetSuite could grow in Durham.
Bronto’s current management team will lead the unit. In a blog post, Bronto CEO Joe Colopy said that NetSuite gives Bronto the opportunity to continue its work, “but applying it to a broader vision, and on a larger stage.”
Colopy and Chaz Felix, Bronto’s chief operating officer, founded the company in 2002. The two former Red Hat (NYSE: [[ticker:RHT]]) employees initially ran Bronto from Colopy’s home. Bronto developed a platform to manage e-mail marketing, and later social media marketing, as well. Bronto’s software offers tracking tools and analytics capabilities intended to fine-tune marketing campaigns and drive repeat business. Bronto customers include Armani Exchange, Timex, and Trek Bikes. Nelson said that NetSuite and Bronto also share some customers.
Bronto, which has never taken on any venture capital investment, has been named to Inc. magazine’s list of the 5,000 fastest-growing privately held companies five times. The company recorded $27.3 million in 2013 revenue, according to its Inc. 5000 listing last year. NetSuite CFO Ron Gill said that Bronto is expected to add between $15 million and $18 million in incremental revenue in the remainder of fiscal 2015. In fiscal 2016, Bronto is expected to account for between $40 million and $45 million in revenue.
