Citrix’s GoToMeeting will now merge with LogMeIn
Earlier in this series, we discussed Citrix Systems’ (CTXS) recently announced fiscal 2Q16 results. As has been the trend with the company for the past few quarters, its fiscal 2Q16 results beat analysts’ expectations. All of its operating segments, except professional services, reported growth.
Apart from announcing its fiscal 2Q16 results, Citrix Systems announced the spin-off of its “GoTo” family of offerings. The GoTo family includes GoToMeeting, GoToAssist, GoToTraining, GoToWebinar, GoToMyPC, Grasshopper, and OpenVoice. GoToMeeting will now be a part of LogMeIn, a web conferencing service provider. LogMeIn and GoTo family agreed to merge in a deal worth approximately ~$1.8 billion.
In 2015, Citrix announced its decision to spin off its GoTo unit. In early 2016, Citrix announced a restructuring that involved the layoff of approximately 1,000 employees and contractors, the pending spin-off of the company’s GoTo family of offerings, and a $200 million annual cut in other operating expenses.
The fastest growing segment in the cloud
The combined conferencing business of LogMeIn and GoToMeeting is expected to bring in $1 billion pro forma revenues in its first year and create one of the world’s leading SaaS (software-as-a-service) companies based on annual revenues, as the above presentation shows. Also, the merged company will have more than two million customers.
According to the Cisco (CSCO) Global Cloud Index, SaaS is expected to be the fastest-growing cloud service through 2018. SaaS is expected to grow at a CAGR (compound annual growth rate) of 33%, whereas the cloud market as a whole is expected to grow at a CAGR of 24%.
Synergy Research estimates show that although SaaS accounted for only 8% of overall software sales, it grew by approximately 40% in 2015, and it’s very likely that it will grow by more than threefold in the next five years. Salesforce (CRM) leads the SaaS space. Microsoft (MSFT), Adobe, and SAP (SAP) are the other leading players in this space.
The LogMeIn-GoToMeeting merger is aiming for a business in the world’s top ten SaaS companies. It is likely to benefit from increased SaaS adoption.