E.piphany, Inc.

views updated

E.piphany, Inc.

1900 South Norfolk Street, Suite 310
San Mateo, California 94403
Telephone: (650) 356-3800
Fax: (650) 496-2431
Web site: http://www.epiphany.com

Public Company
1996 as E.piphany Marketing Software
Employees: 700
Sales: $125.7 million (2001)
Stock Exchanges: NASDAQ
Ticker Symbol: EPNY
NAIC: 511210 Software Publishers

E.piphany, Inc. is one of the leading developers and vendors of customer relationship management (CRM) software. Its flagship CRM software suite includes sales, marketing, service, and analytic applications. When the company went public in 1999, investors pushed its stock price to dizzying heights. With the recession of 2001, demand for CRM software slowed considerably. E.piphanys stock lost much of its value, and the company reported larger than expected losses. It introduced version E.6 of its CRM software suite in the first quarter of 2002, hoping that its new generation of CRM software would spark an increase in CRM spending.

Developing Customer Relationship Management Software: 199698

E.piphany, Inc. was founded in November 1996 as E.piphany Marketing Software. The company secured its first round of venture capital funding in March 1997 and a second round in January 1998. During this period the company was developing software for marketers that would capture and analyze customer data for enhanced marketing campaigns. This type of software would come to be known as customer relationship management (CRM) software. For 1998 E.piphany reported revenue of $3.4 million, with services contributing $1.2 million.

In May 1998 Roger Siboni joined E.piphany as president and CEO. Siboni, a graduate of the University of California at Berkeley, was formerly the deputy chairman and chief operating officer (COO) of the accounting and consulting firm KPMG Peat Marwick LLP. Siboni had a 20-year career at KPMG before joining E.piphany. At KPMG he helped numerous technology startups become major public companies, and he was centrally involved in driving the growth of KPMGs consulting and high technology practices.

Releasing Commercial Version of CRM Software and Going Public: 1999

At the beginning of 1999 E.piphany released the first commercially available version of its E.4 CRM software system. The web-based software suite was designed for organizations that wanted to use their customer data to create one-to-one marketing initiatives. According to Martha Rogers of the Peppers and Rogers Group, a consulting firm that specialized in one-to-one marketing, E.piphanys software made it easier for companies to adopt a customer-centric approach to marketing. The entire E.4 suite consisted of 16 modules, of which eight were released in January 1999 and eight later in the year. The modules enabled the analysis and integration of customer-related data in the areas of finance, sales, marketing, electronic commerce, and support services. A typical deployment of E.piphanys E.4 system cost about $500,000, with individual modules beginning at $200,000. Early adopters of E.4 included Charles Schwab & Co., Capital BlueCross, Visio Corp., and Hewlett-Packard Co.

E.piphany went public later in 1999 and held its initial public offering (IPO) on September 22. There was strong demand for the firms stock, with 4.15 million shares offered at $16 a share. From the start E.piphanys stock price was extremely volatile. By the beginning of November it was trading at higher than $80 a share, having received a boost when the firm gained Amazon.com as a customer for its E.4 CRM system. The firm also released new and updated product modules for its E.4 suite, including modules for analyzing and reporting on customer behavior, for managing e-mail and web marketing campaigns, and others.

E.piphany made its first post-IPO acquisition in November when it announced that it would acquire RightPoint, Inc. for about $392 million in stock. RightPoint developed software that supported real-time, interactive communications with customers. Its software enabled call center representatives to make specific offers to customers on the basis of information retrieved from the companys database of customer information. The day after the announcement, E.piphanys stock surged 40 percent to an all-time high of $157.75.

Expanding Through Acquisitions and Releasing E.5 for E-Commerce: 2000

E.piphanys next acquisition gave analysts cause to question the fundamental valuations of Internet companies. In March 2000 E.piphany announced that it would acquire privately held Octane Software for $3.2 billion in stock. Octane specialized in software for multichannel customer interaction applications and infrastructure software for sales, service, and support. Octane had revenue of $3 million in 1999 and was expected to generate about $35 million in 2000. E.piphanys stock had recently peaked at $317 a share. With the acquisition of Octane, E.phipany would have more than 125 customers, including American Express, Compaq Computer Co., GTE, and Procter & Gamble.

In early April E.piphany announced two acquisitions: iLeverage, a marketing software provider, for about $28.5 million in stock, and eClass Direct, Inc., a direct-mail marketing company that specialized in e-mail marketing services, for nearly $60 million in stock. Following the announcement regarding eClass Direct, E.piphanys stock lost 32 percent of its value, reducing the value of the eClass acquisition to $35.6 million. During the month E.piphanys stock traded in a range from about $45 a share to $125 a share.

E.piphany introduced version E.5 of its CRM software suite in July 2000. The new version incorporated applications from recently acquired Octane Software, merging E.piphanys analytics, campaign management, e-mail marketing, and real-time personalization software with Octanes applications that automated sales, service, and support functions. Thus version E.5 merged CRMs operational and analytical capabilities. E.5 was capable of managing inbound and outbound customer interaction via the web. It had a base price of about $200,000. Through a three-way agreement with LoudCloud Inc. and Interelate, E.piphanys E.5 software was made available as a hosted service, which made it accessible to companies that could not afford to purchase it. Later in the year E.piphany released a version of E.5 for business-to-business electronic commerce.

In October E.piphany and Sun Microsystems entered into a strategic marketing agreement, with both companies joining forces on product development, sales, and marketing. Under the agreement E.piphanys CRM software would be integrated into the Sun Solaris operating system and be marketed as a CRM solution to both firms customers.

Slowdown of Spending on CRM Software: 2001

By the beginning of 2001 E.piphany had about 300 customers in a wide range of vertical industries, including airlines, automotive, e-commerce, financial services, hospitality, and telecommunications. The companys revenue went from $19.2 million in 1999 to $127.3 million in 2000. It had formed alliances with the Big 5 consulting firms and partnerships with manufacturers such as Hewlett-Packard, Cisco Systems, and Sun Microsystems. Its principal competitors were Siebel Systems, PeopleSoft, and Kana Communications.

E.piphany added sales force automation software to its offerings with the acquisition of Moss Software Inc. in February 2001. Moss had more than 100 customers, many of them in financial services and high-tech. E.piphany also acquired the intellectual property of Radnet Inc., a Cambridge, Massachusetts-based developer of portal technology and group-ware applications.

By the start of the second quarter of 2001 it was clear that demand for CRM software was softening. Analysts began lowering 2001 revenue estimates for E.piphany and other companies in the CRM sector. E.piphanys stock, which began the year around $53 a share, fell below $10 a share in April. The company announced that its first quarter revenue would not meet expectations. Losses continued to mount throughout the year, with E.piphany recording a $1.98 billion loss for the third quarter, which the company attributed primarily to the declining stock value of several companies it had acquired.

During the first half of 2001 E.piphany entered into partnerships with ChannelWave and Comergent to offer a platform for building a customer-driven demand chain. The platform would facilitate collaborative marketing, sales, and service efforts for manufacturers, resellers, retailers, and other channel partners. Later in the year E.piphany released its E.5 System Demand Chain Solutions package, which allowed manufacturers, channel distribution partners, and retailers to share customer information across the demand chain. Other modules added to the E.5 system in 2001 included an upgraded sales force automation module.

Company Perspectives

E.piphany is the leading provider of intelligent software for the Customer Economy. In the six years since E.piphany was founded, it has grown rapidly and successfully, with 2001 revenues exceeding $125 million. E.piphany provides CRM [customer relationship management] solutions for over 400 leading companies in the retail, financial services, communications, technology, and travel industries, including over 35 percent of the Fortune 100.

Introducing E.6, a New Generation of CRM Software: 2002

Although 2001 was a difficult year for E.piphany, the company hoped its next generation of CRM software would put it within striking distance of the top CRM vendors. The E.6 suite was introduced in March 2002 and offered more than 100 new features. The new suite supported a rich interaction with customers and included a set of designer tools to help configure applications. E.6 was built on top of a web-based system, Java2 Enterprise Edition (J2EE), and melded many of the technologies E.piphany had acquired from other companies. With E.piphany continuing to receive industry recognition for its CRM software in 2002, the company hoped that its new generation of CRM software would spark more spending on CRM software in the year to come.

Principal Competitors

Kana Software, Inc.; Oracle Systems Corporation; PeopleSoft, Inc.; SAP Aktiengesellschaft; Siebel Systems, Inc.

Key Dates

The company is founded as E.piphany Marketing Software.
Roger Siboni joins E.piphany as president and CEO.
E.piphany launches the first commercially available version of its E.4 software system and goes public later in the year.
The company acquires Octane Software for $3.2 billion; the company releases E.5 CRM software suite.
Sales and earnings slow as CRM spending softens.
The company introduces E.6 software suite.

Further Reading

Analysis Does Business, PC Week, February 1, 1999, p. 52.

Ashman, Anastasia, "Roger Siboni, Internet World, March 1, 2001, p. 28.

Borden, Susan, E.piphany Partners to Polish Demand Chain, CRM Daily, March 19, 2001.

B2B: Fast Facts, [email protected] Week, April 3, 2000, p. 38.

Callaghan, Dennis, Bearish Market Chews up CRM Firms Profits, eWeek, April 16, 2001, p. 37.

, Clusterin g Customer Data, eWeek, July 31, 2000, p. 30.

, E-Market Intelligence: Broadbase, E.piphany Target Market-places with Analytics Offerings, eWeek, October 2, 2000, p. 48.

, E.piphany Extends Its CRM Line, eWeek, February 26, 2001, p. 1.

, Sun, E.piphany Join Forces,eWeek, October 9, 2000, p. 28.

Clancy, Heather, Datamart Included, Computer Reseller News, August 21, 2000, p. 115.

Customer Focus: Marketing Automation, Software Magazine, August 2001, p. 71.

Darrow, Barbara, E.piphany Builds New CRM App Around J2EE, Computer Reseller News, March 18, 2002, p. 4.

, E.piphany Preps Sales Component for E.5. Computer Reseller News, May 14, 2001, p. 90.

Dembeck, Chet, E.piphany Makes First Post-IPO Acquisition, E-Commerce Times, November 16, 1999, http://www.ecommercetimes.com.

E.piphany Delivers CRM for B2B, B2C, Customer Interface, September 2000, p. 65.

E.piphany: Everything You Need to Know About Your Client, Business Week, July 26, 1999, p. EB20.

E.piphany Posts Big Loss, InfoWorld, October 29, 2001, p. 22.

George, Tischelle, Sun and E.piphany Unveil CRM Deal, InformationWeek, October 9, 2000, p. 48.

Grygo, Eugene, E.piphany, Octane Wed Analysis and Content, InfoWorld, March 20, 2000, p. 14.

Harreld, Heather, CRM Vendors Unfold Architecture Plans, InfoWorld, March 18, 2002, p. 44.

Holt, Stannie, and Dylan Tweney, Vendors Hone Business Decision Support Tools, InfoWorld, January 18, 1999, p. 18.

Karpinski, Richard, E-Marketing Gains Measures of Integration, Sophistication, InternetWeek, November 1, 1999, p. 23.

Macaluso, Nora, Stock Watch: EClass Buy Hurts E.piphany, E-Commerce Times, April 17, 2000, http://www.ecommercetimes.com.

Maselli, Jennifer, How May I Help You? Could Mean So Much More, InformationWeek, March 18, 2002, p. 30.

Morphy, Erika, and Kimberly Hill, Analyst: Launch Puts E.piphany in Striking Distance of Siebel, CRM Daily, March 20, 2002.

Russell, Joy D., E.piphany Aims at Siebels Market, VARbusiness, January 7, 2002, p. 26.

Sweat, Jeff, Analysis Turns to Action, InformationWeek, July 24, 2000, p. 22.

Taylor, Dennis, E.piphany Price Soared Before Announcement, Business Journal, November 19, 1999, p. 1.

, Two Firms Beat Crowded Path to Market, Business Journal, Novembers, 1999, p. 1.

Temple, James, No Longer Recession Proof, San Francisco Business Times, March 9, 2001, p. 19.

Tillett, L. Scott, CRM Tools Adapt to E-Marketplaces, InternetWeek, September 25, 2000, p. 30.

Trott, Bob, Growing the Demand Chain, InfoWorld, March 19, 2001, p. 10.

,"Sun, CA Take CRM Plunge, InfoWorld, October 9, 2000, p. 8.

Wang, Andy, Internet Stock Sell-Off Continues, But Investors Keep Cool, E-Commerce Times, October 19, 1999, http://www.ecommercetimes.com.

, Stock Watch: E.piphany IPO Also Set for Big Opening, E-Commerce Times, September 22, 1999, http://www.ecommercetimes.com.

, Stock Watch: E.piphany Surges After Acquisition, E-Commerce Times, November 17, 1999, http://www.ecommercetimes.com.

Whiting, Rick, Sales Decline Abroad Hits E.piphany,InformationWeek, July 9, 2001, p. 32.

David P. Bianco