Marketo shines in first 6 months on public markets

With the Marketo IPO almost 6 months ago, I thought it would be interesting to compare Marketo’s share price performance so far against other similar technology companies in their first 6 months.  And it turns out, Marketo is doing extremely well!

Methodology:

• I Compared 7 marketing companies who offer cloud based solutions: Salesforce.com, ExactTarget (later acquired by Salesforce.com), Eloqua (later acquired by Oracle), Marin Software, Vocus, Responsys and Marketo.
• For each stock, I measured price growth over the company’s first 115 market days (about 5.5 months), then divided by index growth of the S&P 500 over same period.  I called this “Adjusted Price Performance”.  I factored in S&P 500 data rather than straight price growth, since the IPOs of the companies I selected occurred over a 9 year period in very different market conditions.
• Here's the formula:

Adjusted Price Performance = (Price on Day 115 / Price on day 1) / (S&P Index on Day 115 / S&P Index on Day 1)

Results:
TakeAways:

• Marketo stacks up well - Marketo outperformed all selected companies with the exception of Eloqua.  However Eloqua was acquired by Oracle on about day 97, and Oracle paid a ~30% premium over market prices.  If you compare Marketo’s performance to Eloqua’s pre-acquisition price, Marketo matched or outperformed Eloqua after ~3 months in.
  
• Marketing Automation is HOT - It speaks to the street’s confidence in the marketing automation marketing opportunity that Eloqua and Marketo are number 1 and 2 in this comparison.
  
• ExactTarget + Salesforce.com = ?  - If the future of Salesforce.com’s Marketing Cloud rests in the hands of ExactTarget’s leadership, it’s concerning that ExactTarget’s stock was outperformed by the S&P 500 during it’s first ~6 months as a public company.  I am asked frequently by analysts about Marketo, specifically how endangered Marketo is as a result of Salesforce.com’s acquisition of ExactTarget.  The best answer is that it largely depends on Salesforce.com’s ability to create synergy among a long list of acquired teams and assets.  Salesforce definitely has the pieces of the puzzle: ExactTarget, Pardot, BuddyMedia, Radian6, Data.com, and BlueTail, not to mention a best in class CRM.   But do they have the vision and force of will?  One of the many reasons I can’t wait for Dreamforce where hopefully we will get a sneak peak.

I hope you enjoyed this exploration as much as I did! 

Happy Marketing, 

Chris

by Chris Russell

PS – I should probably mention that I am NOT a professional analyst (as you have probably already observed) and that I am a shareholder of both Marketo and Salesforce.com stock.  

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