Jive Financials Show Social Software MomentumJive Financials Show Social Software Momentum

Enterprise Social Networks: A Guided Tour

In its first earnings report as a public company, Jive Software reported an increase in deals worth more than $1 million per year and promised to make some noise with a "Project Thunder" improvement in cloud computing delivery of its product later this year.

Headlines on financial news sites emphasized a bigger loss in the fourth quarter, despite higher revenue, although Venturebeat provided a more upbeat assessment, emphasizing 53% revenue growth over the same period in 2010. CEO Tony Zingale called the results "better than what we expected and a strong finish for the year."

Revenue rose to $22.5 million from $14.7 million, but the net loss for the quarter was $12.7 million. Jive's net loss for the year was $50.8 million and for 2012 it is projecting a loss of $23 to $25 million, as it seeks market share over profitability. In the fourth quarter, Jive increased sales and marketing by 61%, to $13 million, as it sought to win customers from larger companies like Salesforce.com and IBM. Now it wants to put the $131.4 million in net proceeds it raised in its December initial public offering to work cementing its lead.

[Want to know the pitfalls? See 10 Enterprise Social Networking Obstacles.]

Zingale boasted of "winning the largest and most important customer relationships," celebrating "blue chip customers" making significant "enterprise-wide agreements," including PricewaterhouseCoopers, Ace Insurance, and Thomson Reuters. Those customer wins are significant because each is worth more than $1 million in annual revenue to Jive, which sells its software on a subscription basis whether it's deployed on premises or hosted by Jive. "We have never experienced several new deals of this size in a quarter," he said. "While too early to call a trend, this is a sign enterprises are realizing that social business software may be one of the most important decisions they make this decade."

"Consumers are moving to social media faster than any other technology adoption curve in our lifetime," he said, and businesses increasingly see the potential to apply it internally and in communication with partners and customers. More enterprises are putting out RFPs specifically for social business software, he said.

Zingale's combative style was also on display as he made the point that "each of the highlighted customers already [has] relationships with large enterprise software vendors that make a lot of noise about being in social business software." Jive is able to win out over the likes of IBM and Salesforce.com because its focus on social business software distinguishes it from vendors "bolting on" social capabilities to existing products, he said. Jive also has an advantage in being "agnostic" about links to other enterprise systems, such as email, document management, or customer relationship management, in contrast with firms that are trying to expand from a base in one of those categories, he said.

Zingale also revealed a few details about Project Thunder, a technology upgrade currently in beta and due to roll out mid-year. Project Thunder will make Jive "capable of being self-provisioned by customers," making it easier for new and potential customers to sign up for and try Jive online and for departments within large enterprises to provision their own social workspaces, he said. In other words, Jive will be rounding out its cloud computing story. Jive already uses the buzzwords "public cloud" and "private cloud" in references to hosted and on-premises deployment of its products, but its technology is not as cloud-centric as that of competitors like Yammer and Salesforce.com. In a pure software as a service cloud computing model, software providers sign up new customers more or less instantly, creating new accounts from a pool of servers that are all running the same version of the software.

Jive's current hosting model requires more individualized setup, and even some of the customers who have Jive host the software continue to run a 4.x version of the software, rather than moving to the Jive 5 edition of the platform released last summer. One current customer of Jive's hosted offering said her company likes it that way--and would be unlikely to switch to a pure cloud version with automatic upgrades. "We never take the dot-zero release of these things," she said.

Zingale emphasized he believes his company has an advantage for winning large enterprise accounts over competitors that only offer public cloud software. However, he expects Project Thunder to improve sales by making it easier for potential customers to try the platform before they buy. Most customers already start with some sort of pilot project, whether on premises or hosted in a temporary "sandbox" trial environment, he said, but self-provisioning will streamline that process. At the same time, allowing existing customers to expand their deployments by self-provisioning user seats and software modules will allow Jive to increase its revenue from each account, he said.

CFO Bryan LeBlanc said Project Thunder could also provide a migration path to the cloud for smaller customers using the discontinued Jive Express version of the platform. LeBlanc said Jive has seen some attrition of those smaller customers, which it expects to continue in the coming quarters, although the effect on revenue will be "almost insignificant" compared with the bigger deals Jive is closing.

Jive makes software for both internal enterprise social networking and external customer or partner communities. LeBlanc said 59% of the new customer wins are focused on internal deployments. Those deals typically take longer to negotiate, compared with the more established external applications bought by marketing departments, he said. The internal deals require more negotiation with business and IT leaders, but their dollar value also tends to be higher, LeBlanc said.

Follow David F. Carr on Twitter @davidfcarr. The BrainYard is @thebyard

Social media are generating tons of data, but that data only becomes truly valuable when examined in context. Attend the virtual Enterprise 2.0 event Social Analytics: The Bridge To Business Value, and learn how social analytics will provide the bridge to unlocking business value. It happens Feb. 16.