When Dell acquired SecureWorks in January 2011, the hardware giant didn't disclose a price tag for the cloud and SaaS security specialist. But now the bounty is finally known: In an SEC filing, Dell disclosed that it paid $612 million to acquire SecureWorks -- that's roughly five times SecureWorks' annual revenues.
The price disclosure offers some clues around SaaS and cloud computing company valuations. SecureWorks had about $120 million in annual revenues for 2010, though I haven't been able to track down SecureWorks' EBITDA (earnings before interest, taxes, depreciation and amortization). Sources say SecureWorks EBITDA was in the red for 2009 and roughly break-even for 2010... though my sources on the EBITDA estimates concede they could be somewhat off the mark.
Valuations Based on Revenues
On pure revenue multiples it's now possible to analyze the price premium SaaS and cloud companies are fetching.
- Dell paid 5.1 times annual revenues for SecureWorks.
- Time Warner Cable paid less than 2 times annual revenues to acquire Navisite for $230 million.
- Verizon paid 4 times annual revenues to acquire Terremark for $1.4 billion.
Talkin' Cloud concedes: The three items above aren't exactly apples-to-apples (or cloud-to-cloud) M&A comparisons. SecureWorks has its own cloud intellectual property, focused at the SaaS security market. In contrast, Navisite is more of a managed cloud hosting firm, and Terremark has been pushing into cloud hosting, particularly in the government market.
Talkin' Cloud has often wondered if we're in a cloud bubble. Although dozens of cloud companies generate real profits, cloud stock valuations continue to rise swiftly. Our own Talkin' Cloud Stock Index rose nearly 20 percent in Q1 2011.
Meanwhile, Dell Channel Chief Greg Davis has been kicking around ideas for a potential cloud computing partner program. Will SecureWorks fit in that strategy? Talkin' Cloud is investigating...
Side note: Thanks to a smart MSP that tipped Talkin' Cloud off regarding the Dell SEC filing.
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