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As Its Roaming Empire Declines, Syniverse Gets Enterprising

Iain Morris

Chapter and Syniverse
That move reflects rising interest from some of the world's largest organizations in using real-time analytics and messaging-related products to improve performance, says Clark. Addressing diverse needs in the retail, financial services and travel and hospitality sectors has been a clear priority, and Syniverse today counts giants such as Macy's, Western Union and restaurant chain Chipotle among its EIS clients.

"Western Union was having difficulty getting customers to use a loyalty program and so they worked with us on text messaging and in-app push notifications," says Clark, citing an example of the work that EIS does. "We are also talking to them about mobile wallet services."

Takeover activity dating back to 2009 has given Syniverse many of the tools it needs in this market. Eight years ago it spent $175 million to acquire a messaging business then owned by VeriSign Inc. (Nasdaq: VRSN), a move that expanded its network of text-messaging connections and routes. Since then, says Clark, it has been "layering" on technologies that can support the big brands. The €550 million ($657 million, at today's exchange rate) takeover of a competitor called MACH in 2013 has also helped, bringing with it further capabilities in real-time analytics, besides transaction-processing systems. (See Syniverse Gets Personal, Syniverse to Buy MACH for $693M and Syniverse Snaps Up VeriSign's Messaging.)

Does Syniverse need to acquire other businesses to fortify its offering? Clark thinks such deals are unlikely but says partnerships with service providers could further enrich the company's portfolio. Smaller strategic investments also appear to have paid off. Last year, Syniverse spent $45 million on a minority stake in a Chicago-based software company called Vibes, whose "mobile engagement" platform has obvious strategic significance. "They bring the experience of sitting with marketing managers and creating campaigns to be deployed on their platform," says Clark. "That is a great contributing factor in driving our own expertise."

While the EIS business accounts for just a fifth of total revenues, its sales have been growing at a year-on-year rate of around 10%, according to Clark. In the second quarter, they were up as much as 15%, to about $38 million, compared with the year-earlier period. But this was not quite enough to offset the MTS decline, with overall sales falling 1.6%, to $194.5 million. If revenue growth is to return Syniverse to profitability, then sales will have to rise considerably, Clark acknowledges.

Rise & Fall
Source: Securities and Exchange Commission, Syniverse, Light Reading.
Source: Securities and Exchange Commission, Syniverse, Light Reading.

There is cause for optimism, though, given the immaturity of the market. "The mobile Internet is still not being leveraged as comprehensively as it could be," says Clark. To promote the benefits among enterprise customers, and ensure it can adequately address what it sees as a major growth opportunity, Syniverse has been overhauling its entire sales organization to give that more of an enterprise focus. "We're now bringing in very senior staff that have experience in these specific sectors and are helping us to raise the game," says Clark.

Syniverse's telco customers might also give it an important white-label channel to the enterprise market. "We haven't had much traction with operators and are doing better at selling directly [to enterprises], but we are talking to operators about it," says Clark. Other telcos, meanwhile, could become EIS customers in their own right, using Syniverse technologies to improve engagement with subscribers.

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