Back in February we took a look at what Jive’s new CEO Elisa Steele had in store for the company as part of her change program.
We got a bit of an update on progress - or otherwise - yesterday when Jive turned in a second quarter loss of $9.3 million on revenue of $48.6 million. Once markets re-opened, Jive's stock price nose dived but recovered to end the day 14% down on the previous close. That should not surprise but Steele has her work cut out if she is to see through a successful turnaround.
On the analyst call, Steele emphasised that she expected a somewhat bumpy ride and that there’s a long road to travel:
When I became CEO six months ago, I recognized it was imperative that we transition and change as quickly as possible. With the goal of having a more aligned, more focused and more repeatable business model.
We were anticipating these changes would positively impact our financial performance more immediately. Unfortunately, it can be hard to predict in the near term. In particular, our efforts to transform go-to-market approach to better align with our new product focus has led to some short-term gaps in overall market coverage.
These are near term issues that we are already addressing. It does not change our conviction that the overall changes this leadership team is implementing are the right thing to do for the long-term health of the business.
There does seem to be a problem in striking the right pace though. Take the firm’s roll out of Jive-x . Steele said:
We could have performed better. This market is rapidly evolving and we need a team in place focused on selling into the CMO.
One of the areas of investment we're making with Jive-x is creating a dedicated sales and marketing team. We got off to a slower start hiring, training and deploying this team than we expected and have not scaled effectively, yet. However, the reps that we have in this area are ramping quickly and performing well including winning business from the competition's installed base.
We now have a dedicated sales leadership and new marketing leader supporting this business exclusively. And we are working swiftly to finish our coverage model. We are committed to improve execution going forward.
The reason all this new staffing is needed is because customer behaviours have changed, she added:
What we found is the buying motion for Jive-x versus Jive-n has significantly changed. In early days of this market, these decisions were made more in the central area of a company, whether it was via a CIO or other champion.
Now we see a very distinctive split between CIOs and lines of business making decisions around internal collaboration and communication tools and the CMO being a specific influencer and more and more of a driver of creating decisions around brand engagement online.
For Jive, what that meant for us in our new strategy. Is that we needed to create a very specific motion into that new buying behaviour. We never had a dedicated sales team, who really understood that process with the CMO as oppose to the buying process that had been in the past.
So we are in the middle of building that team and that is reason why we believe that we're off to a slower start.
But Jive is eating its own dog food here at least:
We actually use Jive-x for our own support solution for Jive customers and have improved our operation significantly. We now serve 50% more customer inquiries through the products self-service channels. While maintaining customer support satisfaction at a 94% rate.
Steele reiterated her belief that the changes the company is implementing are essential to tap into the three main trends she sees in the market:
One, the emerging digital workplace requires a new way for people to get work done together. Two, real-time messaging is the world's fastest growing communication method and increasingly strategically part of today's work habits. Three, the customer experience is increasingly digitized for brands of all sizes, which requires new kinds of customer interactions and engagement methods.
In addressing these trends, Jive is enjoying some healthy progress in migrating its installed base to the cloud alongside an 80% year-on-year increase in new customers opting for a cloud-deployment model. Steele said:
Our cloud offering provides very quick, easy updates for our cloud customers. We're seeing this in market trends and we're seeing this at Jive, that more and more customers are going to cloud without the same kind of hesitation that maybe you saw a year ago. So our cloud customer count is increasing and that's good for our business and good for our customers.
As case in point, she said:
Cox Automotive is a particularly good example as they were in the process of migrating from Jive 7 to Jive 8 when they say the power and value of the quarterly cloud releases and opted to rollout a new solution that combined two hosted instances into one for their company and their brands.
With American Express Global Business Travel. Jive was selected to upgrade the company's existing internet platform with cloud-based solutions enabling the organization to publish blogs internally, conduct polling, showcase video content and engage employees in new ways across any device.
But overall, the message is one of slower-than-anticipated progress and a call for patience, as Steele concluded:
It will take a bit longer for some of these changes to positively impact our financial results. But we remain confident, it'll put us in a position to generate improved growth and profitability in the future.
The question is whether the slower-than-expected progress is down to a need for internal transformation at Jive or whether the message just isn’t working for existing and potential customers. I’m disposed to favour the former theory for now, but Steele and her team will have to deliver on their plans over the next few quarters to keep Wall Street on side.