CAPS Rating: 2 out of 5

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Member Avatar TMFInnovator (53.69) Submitted: 6/5/2013 9:44:46 AM : Outperform Start Price: $21.87 MKTO Score: +30.73

Marketo's stock sold off 8% on Tuesday after news that would be purchasing Exact Target (ET). ET is a close competitor of Marketo in that they both provide cloud-based marketing software platforms. Many thought that Salesforce might instead have purchased MKTO rather than ET.

As a stand-alone business, MKTO is doing just fine. The company has grown its customer based ten-fold in the past 3 years, from 200 to 2,000. They boast large-name customers such as GE, Intel, and McKesson, but also plenty of small and medium-businesses as well. They were the winner of the 2012 CRM Market Leaders' Award, ranked #20 on the Wall Street Journal's 'Next Big Thing', and were's #1 Marketing Software Company last year.

MKTO is also still a viable takeover target. At today's price of $22.61, they are selling at 10 times 2012's revenues. Though that seems high, others have been acquired at similar valuations. Oracle snapped up Taleo (HR) for 5x sales and Eloqua (Mkt) for 9.5x sales. Salesforce bought ET (Mkt) for 6.6x sales and Buddy Media (social media) for a whopping 19x sales! MKTO at 10x sales is not out of the question...especially when they grew revenue almost 80% last year.

The bottom line is this. Sales and marketing are no longer gigantic edicts passed out from the Corporate offices. Instead, they are piece-by-piece, efficient campaigns that when consolidated will maximize a company's overall ROI. Marketo's Software-as-a-Service allows their clients to determine the effectiveness of their sales and marketing campaigns, which will allow for faster revenue growth and improved customer relationships. Data is king. Whether stand-alone or an upcoming acquisition, Marketo will outperform.

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Member Avatar sjledet1 (78.64) Submitted: 5/17/2013 6:29:00 PM : Outperform Start Price: $24.70 MKTO Score: +15.57

Marketo is the market leader in the SMB space for marketing automation.

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