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Prim Fox on Bloomberg Radio. Two days. Two significant deals in the enterprise software space. Yesterday it was salesforce and demand wear. Today it's click technologies and Toma Bravo. A lot of money being thrown around, and it seems like the paces quickening. Let's find out why and why investors should be focused on this. I'm joined now here in our New York studio by man Deep Singh, software analysts
for Bloomberg Intelligence. Bloomberg Intelligence, of course, gives you unique real time research and context on all kinds of industries and all the market and government factors that impact business. And if you're a terminal customer access Bloomberg Intelligence it b ico. So, Mandy, let's start here. Software industry continues to go through all kinds of disruption and now cloud.
We've been hearing this more and more and more, a big technological shift that's changed in the way company use software. Why is that so significant and and what why is it now leading to a bunch of deals? Sure, so, like you said, Kathleen, this is a big technological shift that takes place once in ten years. And what happens typically in cycles like this is companies do change the way they use software, but it happens over a period of time. So that's why the disruption happens early on
the small companies. They tend to disrupt the market kind of take market share from the small from the larger players, but do it in a way where they will grow very quickly in the first couple of years, and after a while their growth starts to taper. So once that happens, investors focus on the profitability given we see the profitability aspect showing up more now, I think it's timing is
right for companies who sell themselves or do something. Okay, So the cloud, we know that Microsoft is pushed into the cloud. Amazon has pushed in the cloud, and in a company could never really actually technically say it was making money. That's helping them move in that direction. So Click, for example, tell me about Click what they do and what they do in the cloud that so many people are clamoring for. Great question. So Click is an analytics company.
If you look at their functionality, all they do is help visualize your data. Now that makes a lot of excuse me, visualize my data? In other words, that got my all my cluster data. By visualize it, do you mean sort of map it out, ands organized it just kind of it's it's a better way to picture your data draw than just looking at an Excel chart. And it can use that data from any type of source, so it doesn't have to be a spreadsheet. It could
be uh like an unstructured data source. So you calve an example of a kind of company or what kind of data click would be so visualizing. A good example is you have all these cloud applications now Salesforce, dot Com Demand, where these are standalone applications. Obviously the is our transactional systems, so they capture a lot of data over a period of time. But if you're a company using these applications, you have to find a way to
analyze this data because this is critical. That's how you're going to be making your decisions, and and to build a tool which can basically pull in data from different transactional systems and aggregated. So what a retailer uses with a hospital absolutely absolutely, all different verticals, retailers, hospitals, manufacturing, companies, logistics, any system that captures data or a period of time, they need to aggregate it and you need to visualize
that data so that your management can make decisions. And I think this is a good tool to really combine all your data from different systems and help visualize it, and that includes cloud systems. Now, the problem here is they grew very rapidly. Now it's off of like six million will run rate, They're still not profitable. They spend more their fifty of their revenue on sales and marketing, and once your growth slow So they were growing in
excess of every quarter. Now it's slowing to like teens eighteen seventeen eighteen percent, and expectations are it's going to slow down further because competition is rising, because the numbers are getting bigger. At scale, you just can't keep growing twenty plus. You can do that when you're a two hundred million dollar company, but it gets tougher when you're a six hundred million dollar company. And investors they give you all the benefits of growth as long as you
keep delivering on the numbers. Once the growth slows, they start questioning your profitability. And I think that's what is happening with Are there investment opportunities in this space? Yes, absolutely. I think as a large company you would want to wait for a time like this when valuations have come down. So they were at their peak last year, now they have come down this year. After the February decline we had.
And if I'm a Microsoft or and IBM, I'm always looking to kind of fill the gaps in my portfolio. And there are a lot of smaller companies that are out there that are trading cheaper than where they were last year, and it's a good time to buy. Of course, tom a Bravo, Uh privactly snapped up Click. But then who knows, maybe they'll be ready to sell it to somebody for more money. But what about this story about the Microsoft board pushing Saty Develo for a faster move
into the cloud. They're not going fast enough. I mean Microsoft, It's really a tale of three different segments. One of them has accelerated, it's moved to the cloud doing very well. The other couple the Windows piece, the operating system piece which we are used to on our desktop. Once that moves to the cloud, that will really hurt them big time. And I think what the board is drawing its attention is what is the game plan to move the Windows
piece to the PLoud? How do we make offset the revenue that Windows is generating now when pinks all moved to the cloud. And I don't think, uh, the board is satisfied with the way company has outlined its strategy. It has, like I said, it's done very well in the other two segments, the office suite and the infrastructure side. It's really the Windows that is the concern, and I think rightfully so well active, a lot of activity in
this space. And Youth Thank you so much. She's software almost for Bloomberg Intelligence, kind of bringing us noncloud people into the cloud business with him. Thank you so much. As Click a very important company is purchased by Toma Bravo today. I'm Kathleen Hayes. This is taking Stock on Bloomberg Radio. Coming up next oil Opec. They met, but they couldn't agree on a production quota. So it's the bottom of oil prices really in we'll find out now on Bloomberg Radio.