Marketing Pilgrim's "M & A" Channel

Sponsor Marketing Pilgrim's M & A Channel today! Get in front of some of the most influential readers in the Internet and social media marketing industry. Contact us today!

Huh? Oracle Buys Vitrue for Just 3x Revenue?




What just happened?

I thought the words “social media” and “huge valuations” went together like “Facebook” and “privacy issues?”

I was under the impression that we lived in a bubble world where any company that touched social media was afforded a valuation that would make even VCs blush. So how come social media marketing platform Vitrue just sold to Oracle for a reported measly three times revenues?

OK, so it’s not an official valuation, but TechCrunch tends to be “in the know” when it comes to these things…

TechCrunch has discovered and confirmed that software giant Oracle has bought social marketing platform Vitrue for $300 million. [Update: A press release has confirmed the buy at an undisclosed price, though we know it to be $300 million.]…Vitrue, according to a source, was on course for revenues of just under $100 million this year.

Is my math off? Vitrue sells for $300 million on revenues of just under $100 million. Three times, right?

Again, this is all rumor, but where there’s smoke, there’s fire. The big question is, are established companies starting to break down the facade when buying startups? While Facebook may have been fooled into buying Instagram for $1 billion without any significant profits, is Oracle–pardon the pun–wiser?

Vitrue is reported to be “nearly profitable” which may be the reason for such a low valuation. The $100M in revenue looks like a great number, but $100M without profit simply has me scratching my head. If you can’t make any profit from one hundred million frickin’ dollars, what in the world are you doing?

Additionally, how much confidence does a company have in itself, when it sells for just 3x revenue?

That, dear Pilgrims, is where you enlighten me in the comments below. Have at it!