Adobe Considering Purchase of Marketo

Adobe is rumored to be considering a purchase of Marketo, the account based marketing tool, for an undisclosed sum according to sources close to the talks. Representatives for both Adobe and Marketo declined to comment on the nature of the negotiations.

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San Jose-based Adobe currently holds $6.3 billion in cash on hand and has seen its stock rise 72% in the past year.

Adobe is looking to establish a firmer footing in the cloud-based software space to challenge rivals Microsoft and Oracle. Other competitors, like Salesforce, have increasingly come in the cross hairs as well after Adobe purchased Magento Commerce, a digital commerce software company, in June of this year. Marketo’s B2B marketing capabilities would be a good compliment to Adobe’s existing marketing and cloud analytics platforms.

Marketo most recently made news when private equity firm Vista Equity Partners Management took the company private in June 2016 for $1.8 billion. Steve Lucas was named the new CEO of the company after that deal. According to analysts, a future deal with Adobe would most likely warrant a price tag well north of that $1.8 billion figure.

Driven by its digital media arm and the flagship Creative Cloud product, Adobe has surpassed profit and revenue expectations for eight straight quarters. The SaaS company has a market capitalization of $130 billion.

Of revenues for the past year, Adobe Creative Cloud alone generated $1.3 billion out of a total $2.2 billion. The Digital Experience branch of the company generated only $586 million and it is likely that the Adobe management team would like to see this number increase.

San Mateo-based Marketo was founded in 2006. Originally founded as an email marketing company, it has subsequently grown to include other aspects of account-based marketing, including mobile, social, digital ads, web management and digital analytics.

Marketo generated $321 million in 2017 providing services to organizations in a wide variety of industries including manufacturing, higher education, financial services, healthcare and tech. The company has offices in Asia, North America, Australia, and the Middle East.