May SMB Software News Recap

Each month we report on news and updates for the companies we track in the SurePath SMB Index — a basket of 35 publicly traded software and technology companies that serve the SMB market. Check out last month’s post here. Here is what made the news this month:

Acquisitions:

• First Data acquired CardConnect for a hefty $750M USD. The company was most recently owned by FinTech Acquisition Group which acquired CardConnect in 2016 for $438M USD. CardConnect offers SMBs a convenient, centralized system to track, manage and process their payments. The business also integrates with enterprise level ERPs, which presents an opportunity for First Data to expand its product offering.

New Product Launches This Month:

• First Data launched Clover Flex, the next-gen smart POS terminal that can accept PIN entry, NFC, mag stripe transactions, electronic gift cards, and can process EMV chip cards in less than three seconds
• CompareCards By LendingTree Launches SMB Oriented Credit Card Comparison Tool. The business tool will allow business owners to shop and compare business-level credit cards based on their most important criteria such as transaction amounts, business-specific rewards, etc.
• GrubHub is partnering with Toast and Upserve to offer integrations between the POS systems and the GrubHub platform itself to optimize order fulfillment for restaurants
• RingCentral launches new enterprise level webinar solution that can accommodate up to 3000 participants

Executive Changes:

• Atlassian hires CMO Robert Chatwani, formerly from eBay, to continue their growth
• EIGI taps current CFO, Marc Montagner, to serve as interim COO as well as his CFO role
• H&R Block CEO Bill Cobb retires. Tom Gerke, current General Counsel and Chief Administrative Officer tapped to be interim CEO

Financing Events:

• Shopify is raising $500M USD in a secondary offering of Class A subordinate shares. The stock has been on a tear this year. So, this is a great time to sell some shares in the secondary market.
• LendingTree announces offering of $200M USD of convertible senior notes due 2022
• MindBody is seeking to offer an upwards of $134M USD in a secondary offering to be able to fund further growth and possible acquisitions.

Other News:

• Web.com is supposedly in talks with private equity firms for a potential buyout scenario. While no details have been disclosed yet, there has been a continued trend from PE players to acquire tech companies.
• Facebook announced that it will soon be offering direct orders for restaurants on their official Facebook pages, triggering an immediate drop on GrubHub shares. The online ordering solution stock quickly rebounded though, showing its resilience even in the face of Facebook.
• HubSpot has taken out its chequebook and invested in two startups in May. HubSpot invested in Terminus, an account-based marketing platform, which raised a $10M Series B, with venture backers including Edison Partners and Atlanta Ventures. The company also invested in PandaDoc, a digital transaction management platform that automates contracts. Pandadoc is one of Hubspot’s most popular integrations.
• First Data partnered with Alibaba Group to allow acceptance of Alipay, the mobile payments phenomenon that has become a force in Asia. Now businesses that are using First Data’s Clover platform will be able to accept Alipay, putting it at the same level as Apple Pay.
• Wix had a strong first quarter, with revenue up 50% YoY and the company surpassing the 100M user count. It’s looking like the company’s recent integrations and unique AI offering are paying off
• Xero announced an integration with Capital One to allow SMBs to connect their bank accounts directly within Xero. Banks have historically avoided direct data feeds into software. Hopefully, more banks will follow Capital One’s lead.
• Despite a 24% increase YoY in revenue, Yelp saw its stock price drop 20% after outlook given in its Q1 earnings falls short of estimates
• Intuit stock popped 7% following its earnings call after announcing higher than expected outlook. Revenue was up 10% YoY for its critical tax season, and Quickbooks Online saw a 59% increase in subscriber count, proving that the SaaS model is working for the business

At SurePath Capital Partners we help startups raise the capital needed to become market leaders. When the time is right, we help our clients achieve profitable, deliberate exit strategies. We only work with startups in the SaaS, e-commerce and marketplace segments. Across those segments we have a deep focus on companies serving the global SMB market. Say hello:info@surepathcapital.com