Workday and Splunk's Latest Deals Come Amid a Strong 2018 for Software M&A

Quite a few enterprise software firms that have delivered solid organic growth in recent years have been in an acquiring mood over the last few months.

This trend likely has something to do with how the businesses of these firms have evolved thanks to years of growth and aggressive spending. It's also reflective of how many smaller software firms are now looking to cash out, either through a sale or an IPO.

Cloud HR and financial software leader Workday (WDAY) and machine data analytics leader Splunk (SPLK) are the latest enterprise software vendors to announce noteworthy acquisitions. On Monday morning, Workday announced it's buying Adaptive Insights, a provider of finance and sales planning software, for $1.55 billion in cash.

The deal, which comes less than a month after Adaptive filed to go public, isn't cheap: Workday is paying about 13 times Adaptive Planning's fiscal 2018 (it ended in January) billings. Though Workday already offers a business planning product, the company asserts overlap is limited since its offering is more focused on workforce planning rather than finance and sales. In addition (per Mizuho's Stephen Bersey), Workday says there's only 10% overlap between its clients and Adaptive's, and whereas Workday's revenue base skews towards enterprise clients, 77% of Adaptive's fiscal 2018 revenue came from midmarket firms and SMBs.

Splunk announced on Monday that it's spending $120 million to buy VictorOps, a provider of software that helps DevOps teams be notified about and respond to software incidents. Splunk, whose software is used by plenty of IT operations teams to analyze machine/log data to uncover potential issues, says it will work with VictorOps to create a common "platform of engagement" for monitoring data, managing software events and resolving incidents. The company also asserts it will leverage machine learning to help DevOps teams "speed [incident] resolution and learn from past actions to make proactive recommendations."

Editor's note: The full version of this article was published by The Deal, a sister publication of TheStreet that offers sophisticated insight and analysis on all types of deals, from inception to integration. Click here for a free trial.

4 Top Experts Tell You How to Play the Market. TheStreet's Scott Gamm recent sat down with top market watchers from Bank of America, Fisher Investments, Invesco and Wells Fargo. Click here and register to watch a free roundtable in which they lay out their best advice.

 

More from Investing

Nvidia Tumbles on Soft Guidance: 5 Key Takeaways

Nvidia Tumbles on Soft Guidance: 5 Key Takeaways

Intel Boosts Stock Buyback by $15 Billion

Intel Boosts Stock Buyback by $15 Billion

Walmart Stock Slips as Market Anxiety Stymies Earnings Day Pop

Walmart Stock Slips as Market Anxiety Stymies Earnings Day Pop

Jim Cramer Correctly Predicted Nvidia's Earnings Miss Back in October

Jim Cramer Correctly Predicted Nvidia's Earnings Miss Back in October

Applied Materials Sinks After Hours on Earnings Miss

Applied Materials Sinks After Hours on Earnings Miss