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Collaboration Software Maker Jive Explores Sale

Qatalyst Partners' Frank Quattrone led the sale exploration.

Re/Code illustration

Jive, the enterprise-focused software company that makes social communication and collaboration tools, has explored a sale during the last several months, sources familiar with the matter tell Re/code.

These sources say the company has retained Qatalyst Partners, the investment bank led by Silicon Valley dealmaker Frank Quattrone, to help the company find a buyer. The list of companies approached as potential buyers include enterprise software giants Oracle, SAP and Workday, the cloud-based human resources software firm. All three passed, the sources say.

Jive shares rose by more than eight percent to $9 on the Nasdaq shortly after Re/code published the report.

“Quattrone has been shopping Jive around for about five months,” one source at a company that had been approached told Re/code.

It wasn’t clear what price Jive may be seeking, but the company is currently valued at about $584 million, based on Monday’s closing price of $8.43 a share. It also wasn’t clear whether the sale process was still ongoing. Jive spokeswoman Amanda Pires had no comment.

Oracle and SAP declined to comment. Workday and Qatalyst Partners had no immediate comment.

Jive has had a tough time since its 2011 IPO. Sales in 2013 improved year on year by about 28 percent to almost $146 million, but the company’s operating expenses grew much faster in the same period to north of $166 million from $116 million.

On a non-GAAP basis, Jive lost 55 cents per share in 2013, higher than the 43-cent loss it reported in 2012. Analysts expect a 44-cent loss this year.

Jive shares took a beating last month when on Feb. 11, after reporting quarterly earnings that were more or less in line with the expectations of analysts, it issued guidance for the current quarter that was lower than expected. The resignation of James Larson, president of worldwide field operations, also stung. Jive shares fell by nearly 19 percent the next day.

The problem appears to be that customers aren’t as interested in social software for the enterprise as it seemed a few years ago. In 2012, Jive added 133 new customers. In 2013 it added only just a little more than half that many: 76. Since Jive is a subscription product, the pace of customer additions is a key indicator of the potential for future revenue and billings.

Jive debuted in a late 2011 IPO that raised more than $160 million. It’s one of several companies that has sought to sell collaboration software for businesses that took its cues from consumer social networks like Facebook and Twitter. Its biggest rival was Yammer, which Microsoft acquired in 2012 for $1.2 billion.

Other companies in the space include Socialcast, which VMware acquired in 2011. launched its own social collaboration service known as Chatter in 2010. A fifth player is Moxie Software, which has venture capital funding from Hummer Winblad and Foundation Capital, among others.

Jive’s biggest shareholders include its main VC investors, Sequoia Capital, which owns about 20 percent of shares outstanding, and Kleiner Perkins, which owns about 7.5 percent. Other significant shareholders include CTO and co-founder Matthew Tucker, who owns about nine percent, and co-founder Bill Lynch, who left the company last year but still owns about eight percent of the company’s shares. Empire Capital Management, a hedge fund based in Westport, Conn., owns another eight percent.

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