Publicly traded Keynote Systems is paying $60 million in cash to buy venture-backed Mobile Complete Inc. maker of a cloud-based platform for testing and monitoring mobile websites and apps. Mobile Complete, which operates as DeviceAnywhere, was backed by Innovacom and Motorola Ventures.
Keynote® Systems (NASDAQ:KEYN), the global leader in Internet and mobile cloud monitoring, signed a definitive agreement to acquire privately-held Mobile Complete, Inc, doing business as DeviceAnywhere, a leading enterprise-class cloud-based platform for testing and monitoring mobile websites and apps, for approximately $60.0 million in cash plus a potential earn-out.
Umang Gupta, Chairman and CEO of Keynote, said: “Combining DeviceAnywhere’s leading testing and quality assurance (QA) cloud-based solutions with our strong mobile monitoring business firmly establishes Keynote as a leader in the mobile testing and monitoring markets. The resulting increased product breadth and scale meaningfully enhance our competitive position. In addition, the acquisition will expand our addressable market into the immediately adjacent enterprise mobile testing and quality assurance space, which we project could enable us to grow this into a $100 million business.”
DeviceAnywhere provides award winning cloud-based products and services for testing and monitoring the functionality, usability, performance and availability of mobile apps and websites. More than 1,200 organizations rely on the DeviceAnywhere platform to accelerate the entire QA lifecycle to deliver mobile applications, content and services faster, with more confidence about quality of service, while reducing downtime and testing costs.
Also based in San Mateo, DeviceAnywhere will continue to be led by its co-founders Faraz A. Syed, CEO, and David J. Marsyla, CTO, and will operate as a standalone subsidiary, similar to Keynote-SIGOS, after the transaction.
Gupta added, “We welcome DeviceAnywhere’s talented employees to Keynote. We are especially pleased that industry pioneers Faraz and David will continue to provide expertise, vision and leadership by heading up our new Keynote-DeviceAnywhere division.”
Syed, said, “DeviceAnywhere’s team is excited to be joining Keynote at a time when the enterprise mobile industry is beginning to accelerate. Our complementary offerings provide a full gamut of options for our existing and prospective customers, and we look forward to working with Keynote to increase our combined share in this dynamic market.”
DeviceAnywhere logically extends Keynote’s enterprise mobile product portfolio into the immediately adjacent mobile testing and QA market. The complementary solutions enable Keynote to address a wider spectrum of the mobile market by now offering new and existing enterprise customers the leading solutions in both mobile performance monitoring and in mobile testing/quality assurance.
Terms of the Agreement
The transaction is expected to close in the next two weeks, subject to customary conditions. The purchase price consists of $60.0 million in cash plus a potential cash earn-out of up to $30.0 million if certain calendar year 2011 and 2012 bookings, revenue and EBITDA thresholds are achieved. DeviceAnywhere’s revenues have grown over 15% on a compounded annual basis over the last three years to approximately $20 million in revenue for the trailing twelve months ended September 30, 2011. Keynote expects the acquisition to be non-dilutive to non-GAAP EPS in fiscal year 2012 and accretive to non-GAAP EPS in fiscal year 2013. Substantially all of DeviceAnywhere’s 119 employees are expected to join Keynote and move into Keynote’s San Mateo headquarters in 2012. Management will conduct a call today to discuss the transaction and expects to provide additional detail on the fiscal 2011 fourth quarter and year-end conference call scheduled for November 3rd, 2011.
Keynote will host a conference call and simultaneous webcast at 9:00 am ET/ 6:00 am PT today, Monday, October 10, 2011. To access the call in the U.S. please dial (800) 588-4973 and for international callers dial (847) 230-5643. Callers may provide the following confirmation number 30918646 to access the call more quickly, and are encouraged to dial into the call 10 to 15 minutes prior to the start to prevent any delay in joining. The webcast can be accessed at www.keynote.com and available for replay for 90 days. In addition, a replay of the call will be available via telephone for two business days, beginning two hours after the call. To listen to the telephone replay in the U.S., please dial (888) 843-7419, and for international callers dial (630) 652-3042 and enter access code 30918646#.
This press release contains forward-looking statements that are not purely historical regarding the Company or management’s intentions, hopes, beliefs, expectations and strategies for the future. Because such statements deal with future events, they are subject to various risks and uncertainties, and actual results could differ materially from the Company’s current expectations.
Forward-looking statements in this release include, but are not limited to, forecasts concerning Keynote’s future market opportunities, retention of key employees, growth, financial impact of the acquisition and future offerings of the combined companies. It is important to note that actual outcomes and Keynote’s actual results could differ materially from those in such forward-looking statements. Factors that could cause actual results to differ materially include risks and uncertainties such as risks related to the integration of the acquisition, including retaining customers and employees the uncertain impact global economic conditions will have on Keynote’s business or the businesses of current or potential customers, Keynote’s ability to successfully market and sell its and Mobile Complete’s current services to new or existing customers, Keynote’s ability to develop and introduce new services in a timely manner and customer acceptance of new services, the extent to which demand for Keynote’s various services fluctuates, the risk that Keynote’s recent revenue growth may not be sustained, the extent to which existing customers of Keynote and Mobile Complete renew their subscriptions and purchase additional services, particularly enterprise customers, Keynote’s ability to attract and retain new customers, liabilities assumed as a result of the acquisition; our ability to continue to manage expenses; the impact of unforeseen expenses, including as a result of integrating the acquisition; Keynote’s ability to operate its international operations and manage related costs successfully, pricing pressure with respect to Keynote’s and Mobile Complete’s services, unforeseen expenses, competition, costs associated with any future acquisitions, the effect of acquisitions by competitors in Keynote’s target markets, and Keynote’s ability to keep pace with changes in the mobile and Internet infrastructure as well as other technological changes. Readers should also refer to the risks outlined in Keynote’s reports filed with the Securities and Exchange Commission, including its Annual Report on Form 10-K for its fiscal year ended September 30, 2010, and its quarterly reports on Form 10-Q and any current reports on Form 8-K filed during the fiscal year.
All forward-looking statements and reasons why results might differ included in this release are made as of the date of this press release, based on information available to Keynote as of the date of this press release, and Keynote assumes no obligation to update any such forward-looking statement or reasons why results might differ.
DeviceAnywhere provides the industry’s only true enterprise-class, cloud-based platform for testing and monitoring the functionality, usability, performance and availability of mobile applications and websites. The company’s suite of mobile application lifecycle management (mobile ALM) solutions assures the quality of enterprise mobile applications and services, helping to extend businesses and brands to the mobile channel.
To learn more about DeviceAnywhere and to sign up for a free trial, visit www.deviceanywhere.com. Interested in our perspective on trends and issues in the mobile marketplace? Visit our CEO’s blog, our dedicated blog on IBM developerWorks and follow us on Twitter.
Keynote Systems (NASDAQ: “KEYN”) is the global leader in Internet and mobile cloud monitoring & testing. We provide companies with solutions for continuously improving the online experience. Founded in 1995, Keynote delivers testing, monitoring and measurement products and services for any enterprise including online portals, e-commerce sites, B2B sites, mobile operators and mobile infrastructure providers. Keynote products and services help companies improve customer experience in four areas: Web performance, mobile quality, streaming and real user experience testing.
Known as The Mobile and Internet Performance Authority™, Keynote has a market-leading on-demand infrastructure of over 3,000 measurement computers and mobile devices in over 240 locations around the world. Keynote’s 2,800 customers represent top Internet and mobile companies including American Express, AT&T, Disney, eBay, E*TRADE, Expedia, Google, Microsoft, SonyEricsson, T-Mobile and Vodafone.