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Putting a value on MySQLMatthew Aslett, January 18, 2008 @ 12:24 pm ET
Since Sun announced its acquisition of MySQL for $1bn, there have been some suggestions that perhaps Sun paying too much for the open source database vendor. Calculating the multiple for MySQL has proved difficult because there are no official figures to go on, and also because many of the unofficial figures that are floating around are contradictory.
Prior to the acquisition being announced a number of revenue figures for MySQL had been publicly disclosed. For example:
- 2006 revenue of $50m, according to Cnet.
- 2005 revenue of $34m, according to Cnet.
- 2004 revenue of $20m, according to Forbes.
- 2003 revenue of $12m, according to Cnet.
- 2002 revenue of $6.5m, according to Cnet.
Based on those figures, 2007 revenue of between $70m-$80m seemed a fair estimate, so it was no surprise to hear Wall Street analyst Toni Sacconaghi of Sanford Bernstein state on the announcement conference call that he estimated trailing 12-month sales of between $60m and $80m. Elsewhere Wired cited an analyst estimate of $70m-$85m, while Ovum estimated 2007 revenue at $70m.
When it comes to calculating an acquisition multiple, estimates are good but official figures are better. Unfortunately, the fact that MySQL had been preparing for its IPO meant that executives had been unable talk about any numbers the last time we spoke. Sun also declined to provide official numbers following the acquisition announcement, but did point us to third party figures that indicated:
- 2006 revenue of $34m.
- 2005 revenue of $16m.
- 2004 revenue of $14m.
What to make of that? As can be seen from the Deal Analysis (subscribers only, but also covered by Matt Asay), we estimated “trailing 12-month (i.e., 2007) revenue to be about $48m, and if we assume slightly slower growth in 2008, we get to about $65m… Given that, it would mean Sun is paying 20.8 times trailing 12-month revenue and 15.4 times projected 2008 revenue.”
“I think this is roughly accurate. I’ve heard on good authority that MySQL’s 2007 bookings were close to $60 million,” noted Asay.
Other sources also indicated that MySQL’s 2007 revenue was less than had been previously estimated:
- “MySQL… had 2007 revenue of $53 million,” said The New York Times.
- “The company had $50 million in fiscal 2007 revenue,” said MarketWatch.
- “Sales at MySQL rose 50 percent to $50 million in fiscal 2007, Sun said,” noted Bloomberg.
Which appeared to settle the argument. Or maybe not:
- “Mr Schwartz said that MySQL had revenues last year of $70m,” said the Financial Times.
So which is it? This additional line from the Bloomberg report is enlightening:
- “Bookings also increased 50 percent, to $70 million.”
Clearly a mixture of revenue and bookings numbers are being thrown around here, which makes it difficult to come to a definitive conclusion. I don’t think anyone is being deliberately misleading here, but it would be nice to get a straight answer.
As MySQL’s revenue will shortly be subsumed into Sun’s there are probably a lot of people reading this and thinking “who cares?”. It is important when considering the potential value for future open source-related M&A’s however. The difference between $50m and $70m is significant and could be the difference between a 12-months trailing multiple of 20, and one of 14.3.
For a open source vendor with $25m in revenue, that could be the difference between deal worth half a billion dollars and one worth $357.5m. There will be plenty of open source executives and investors out there right now trying to work out which one is more likely.
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