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Jive escapes the dance-off for another quarter as losses narrow

Stuart Lauchlan Profile picture for user slauchlan February 17, 2016
Summary:
A solid seven for this quarter's Jive, but the threat of a dance-off in the increasingly competitive collaboration market remains.

len-goodman
No ten from Len just yet

If we’re going to be judging this particular Jive, it’s still not scoring a ten from Len, that’s for certain. But is there any sign of improvement in the turnaround of Jive Software? Well, just maybe there is.

The collaboration software firm yesterday turned in a Q4 loss of $8.5 million, compared to a loss of $12.5 million for the same quarter last year,  on revenue up 5% to $50.2 million. The full year’s loss narrowed from $56.2 million to $33.6 million against revenue up 10% to $195.8 million.

There is a shift underway in the breakdown of those revenues. For the full year, product revenue was $180.2 million, an increase of 11% year-on-year, while services revenue of $15.6 million was down 5% on a year-on-year basis. In the fourth quarter, the shift is all the more obvious, with services revenue down 12% year-on-year.

This is pitched as good news as validation of a shift towards cloud adoption by the installed base, which Jive positions as reducing the need for professional services fees for what it calls “heavy lifting” customization. In other words, the lower the services revenues, the more likely it is that cloud adoption is building.

The firm ended the year with 993 customers, compared to 950 a year ago, which leads CEO Elisa Steele to comment:

While we are striving to increase the number of new logos, we are also targeting longer term customers best suited for our products.

Q3 ended with 989 customers, so with Q4 ending only four up on that and Steele listing a long line of new logos for the likes of Jive-n, there are perhaps questions to be asked about attrition and churn here?

That said, the firm is committed to getting more customers to buy into its cloud offerings. Steele insists this is proceeding apace:

A greater number of new and existing customers chose cloud deployment. In fact in Q4, almost half of new and up-sell sales activity and more than 90% of new logo business related to cloud deployments. And in 2015, we saw an increase in existing customers migrating to the cloud from our hosted and on-premise solutions.

Pushing for cloud adoption represents a major transition for Jive to increase efficiency and target customers of all sizes, not just medium and small companies, but also some for our biggest customers.

Onwards

So 2015 is being positioned as a year in which Jive consolidated and made necessary adjustments to fuel future growth. For example, the launch of the Interactive Internet offering meant bringing the enterprise social capabilities of Jive-n, Jive-w mobile app, Jive Daily, Jive Chime and Jive Circle into a single cloud-based solutions.

For 2016, the push now is towards being profitable by year-end with a simplified packaging and promotional program as a connective hub for organisations. Steele explains:

By integrating siloed software applications and processes with communication, social and collaboration capabilities, we can unite an organization’s workers internally and externally within an ecosystem of employees, partners and customers. We enable our customer to work smoothly between Microsoft Office, Dropbox, Google Docs, SharePoint, Box and many other software alternatives that company used internally and in the cloud.

Earlier this month, we formalized our established market advantage by rolling out the Jive WorkHub to leverage our success experienced by our extensive customer base and over 30 million people worldwide. Regardless of what software people are using or where they are storing their documents, Jive is the answer to making all work together as efficiently as possible. We work with many customers over the years to implement our products and we’ve accumulated many best practices especially for certain lines of business and industry verticals.

Steele acknowledges that the collaboration space is becoming a more competitive landscape, but argues that Jive has the strengths to come through:

The point players in terms of very specific apps or products, we don’t see a lot in competitive deals, mostly because our solutions are solving core business process applications within the company, like the HR solutions or the marketing solutions, the healthcare solution. So they are much more robust business problems that we’re solving, so we don’t see that competitively in a deal or trying to win an account.

On the other side of the spectrum with the larger players, we do see that pressure in terms of adding to the full stack and adding on some kind of social capability. There are two key differences. One, Jive’s offering is robust around any solution to integrate. And the second is the continued fragmentation of It. So there is no real company at this point in time that has only one stack. Everyone is using a little bit of everything and that puts Jive in a competitive advantage when we’re being used as the hub. When we’re in the situation where we are competing for a hub-like or internet-like, then we win more.

When we’re in a situation where the customer’s really looking for just light social capability, that’s a tougher competitive dynamic for us. That customer will tend to go with an integrated solution because they are not looking for robust business solution.

She concludes:

From my point of view, the number of new entrants in this market and the number of current players adding special capabilities everywhere you turn, is the clear indication that this market is interesting and growing, even outside the third party predictions. I think that is super important because new entrants means opportunity.

We started literally two years ago redefining the category as not being about social enterprise, but being about business value. You see more and more that’s happening, even with the third party analyst firms.  There are several firms now re-looking at what is this category about? It’s being broken into segments because there are different problems and different types of things that need to be solved, for both employees and customer experiences. So I am optimistic about the category for those reasons.

My take

As I said, it wouldn’t be a ten from Len, but probably a ‘Sev-EN’ and avoiding the dance-off for another quarter.

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