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Broadsoft (and Others) For Sale

Rumor has it that Broadsoft hired a banker to look at a sale (to a private equity firm most likely). This rumor has been reported by William Blair, Yahoo News, Light Reading and more.

Note reports that Broadsoft is for sale are accompanying reports that 8x8, RingCentral and others are also looking at strategic options.

There are a number of indicators that UCaaS is in trouble: Avaya in bankruptcy; Shoretel being grabbed by Mitel; Broadview to Windstream - to name but a few. There is also the big problem that keeping the sales engine going at 20+% year over year is not just hard but impossible. [In Fusion's investor presentation on the Birch acquisition, FSNN notes that organic growth is 2-4%!!!]

Most providers are not profitable. Light Reading reports, "Like 8x8 and RingCentral, BroadSoft has been growing its business but has struggled to turn that growth into operating profits. In the second quarter of this year, the company reported a 9% year-on-year growth in revenues to $88.8 million but an operating loss of $1.5 million."

"RingCentral, meanwhile, reported a 30% year-over-year growth in revenues to $119.4 million in the second quarter, but reported an operating loss of $7.5 million." About sixty cents of every dollar goes to sales and marketing.

"8x8 reported a 15% increase in total revenues to $69.1 million in the three months to the end of June (its fiscal first quarter), and an operating loss of $5.5 million." That 15% is down from 20+%.

"For FSNN, the company currently has $2.41 Million of cash on the books, which is offset by $6.11 Million current liabilities. You can get a sense of how sustainable that is by a levered free cash flow of $-1.18 Million over the past twelve months," SNJ states.

Might as well get out if someone is willing to buy you.

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