Below are some quick notes from Jive Q3 conference call. There were certainly a lot of good news in the call which point to a turnaround. I expect the groundwork layed by the company this year to reap big benefits in 2015 and beyond.

> Zingale retires but now becomes takes up the position of Executive Chairman of the Board.

> Elisa Steele becomes the interim CEO & president of Jive.

– This is certainly a positive move because Jive no longer wants to sell itself. Tony Zingale brought his experience of building out small enterprise businesses to billion dollar businesses before selling them to larger companies. Clarify and Mercury which were sold at $2B and $5B respectively which is quite impressive. However, Jive is now moving back its focus onto GTM strategies which Elisa Steele has been a major part of this year. Elisa Steele has done a great job designing the GTM strategy and brand which is evident in the net new logos and numbers reported in Q3. With that being said, Zingale will stay on board as Chairman and focus on partnerships and customer relationships which is his area of strength. This also leaves room for potential acquisitions given his track record in M&A.

– Lastly I want to note that Jive has already built out a powerful platform that is no doubt the best in its class. Jive’s IP/technology is well ahead of competition so now the focus is more on marketing and sales execution which has been a problem for Jive until recently. With Elisa taking up the top job, Jive’s attention will turn to this.

> Jive handily beat top and bottom line.

> Revenue was $46.6 million, up +25% yoy vs $44.3 million estimates

> 4 cents loss per per share vs. 9 cents loss per share estimates.

> ST billing was $45.2 million, up +16% YoY

> Total billings up $50.2 million up 36%

> Smallest quarterly loss in 5 years

> $129.1 million cash compared to $139.2M in Q2

> Raised total FY14 revenue guidance to $177.5 million to $178.5 million from $172 million to $176 million, 22% yoy growth.

> Expect FY14 non-GAAP loss from operation between $18.7 million to $20.7 million compared to our prior guidance of a loss $24 million to $28 million.

> ST Billings growth guidance remain the same – mid to high teens.

> FY14 Non-GAAP loss per share of $0.28 to $0.30 vs prior guidance of $0.35 to $0.43.

– I am definitely impressed by these numbers. Special attention to quarterly loss which has been coming down significantly. The ST billings were decent too and hope to see +20% in the coming quarters. According to my estimates, Jive will bring in at least $205M or more in revenue for FY15. This means Jive is currently trading at only 2X FY15 sales which is among the lowest in the sector. Given the current trajectory & Jive’s dominance in the market, Jive is clearly undervalued. Jive customer count is nearing 1000 which includes quality name like Deutsche Bank, Apple, Google, Genentech, Citi, VMWare, EMC, Akamai, Eli Lilly, Oracle, ADP, etc. Also important to note is the adoption rate, premium, and margin. Therefore, even when competitors like Yammer, Chatter, and IBMConnections claim large user base, they are no way close to ~$200M in revenue. Most adopters of such internal and external solutions are willing to pay a premium which is great news for Jive.

As an example, SideCar had 60% adoption in just the first month of launch. Another example that was highlighted at JW14 was FICO w/ 97% adoption. Factors such as high adoption rate explains the margin & strong upsell numbers that Jive has over other competitors.

Clearly, there is an opportunity for Jive to take over the ESN market and it is doing so. I suspect Jive will remain an important acquisition target with large Enterprise Software vendors like Oracle who can get and give a huge boost by selling Jive on to their massive customer base backed by quality brands & adoption that Jive already has.

>Jive added 33 net new customers which is the highest in the past 7 quarters.

>936 customers compared to 903 customers in Q2

>Jive is singing a lot of multi-year deals incl w/ Thomson Reuters, US Department of Veterans Affairs

– 33 new logos is a great progress for Jive’s GTM strategy. Jive already has a great history with customer retention and upsell. The key factor I have been watching is the net new customers as well as the quality of the customer (size, brand name). Just in Q3 alone we got to see some great high quality logos – Barnes and Noble, BG Group, Burger King, Carestream Health, Chesapeake Energy, Deutsche Lufthansa AG, Ellucian, HGST, Lebara Mobile, Marketo, Medidata Solutions, MGM Resorts, Silicon Valley Bank, Thomson Reuters, Trinity Health, The US Department of Veterans Affairs, and one of the largest life insurance companies in the United States (Prudential is my guess), among others.

– Another point to note is that Jive is not just being used as a social tool, it is a platform on which companies are building their businesses on. For example, Pulse VA will be built on Jive to power 300,000 dedicated clinicians and specialist across 1,700 geographically dispersed medical locations to server millions of patients. Sidecar, Akamai, and Penn Foster are great examples of a growing market for JiveX which none of the competitors current have (except Lithium to a small extent). I believe Jive’s recent focus on Jive External Communities market is starting to pay off & I expect it to be a critical part of the turnaround story.

Closing notes: Most analyst reports haven’t factored in any data from Cisco Sales Channels yet which can add more firepower to this momentum. Jive does not have control over what Cisco does but if Cisco does it correctly, both the companies can each get a huge boost to their product portfolio given the strong value proposition that already exists & is proven.


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