Wednesday, June 9, 2010

Exalead bought by Dassault Systèmes for 135 M€...

Sinequa becomes the European leader among European pure players Search vendors after Autonomy. A few personal comments on Exalead takeover by Dassault Systèmes: I see three reasons to be enthusiastic:

A very nice deal

As a French tax payer, I am happy to see a company that has been heavily supported by French innovation funding system be saved by a brilliant exit, even more when this exit is with the French bigger software vendor. It’s great and I congratulate the protagonists with a sincere admiration (we are competitors, but it does not mean enemies, it just means we play in different sides but on the same playground).

I used the word « saved » because Exalead displays in 2009 revenues of 13,9M Euros with 15 Millions of losses for the same year. Those consolidated figures are available to all at the French Tribunal de commerce.

So everything Exalead created will be capitalized and developed by Dassault Systèmes. It’s excellent news. As an entrepreneur and as a board member of the AFDEL (French Software vendors Association of whom Dassault Systèmes is one of the founding members), I have a lot of respect and admiration for the company Dassault Systèmes and for its leader Bernard Charles, who inspired me. This is a positive message and model sent to the French Software industry. Dassault Systèmes saw the importance of Search and they have paid the value for an european technology.

A new High in valuation, good news for the industry in général and for search in particular

The important valorisation (around 10 times 2009 revenues, 8 times 2009 losses) is an excellent news for many reasons:

First of all, this is even better than last valuation ratio (FAST bought by Microsoft a bit more than two years ago, with a multiple of around 7. This shows that Search is becoming more and more strategic.

This amount proves that search is not becoming a commodity, but indeed it is becoming a mission critical enabling technology for enterprise applications: PLM, ERP, CRM, CMS, etc… that is for search in OEM.

Just like databases when ERP emerged, Search also demonstrates every day more and more that it’s not only a way to access to documents or information, but also an enabling technology allowing customers or employees to perform their tasks efficiently. At Sinequa, we put this simply: we went from a search engine allowed to find documents and information to a search that triggers decisions or actions (hence the integration in other applications, or the generation of new functionalities - SBA).

Excellent news for Sinequa and for its customers and partners

Search is strategic, but it has not reached maturity in terms of industrial applications. We only begin to see how search integrated with other tools can become the corner stone for tomorrows’ enterprise applications.

There are two projects in this Exalead - Dassault Systèmes deal, as underlined by the communication in two times : first the OEM deal a few weeks ago, then the takeover today.

The first project aims at empowering Dassault Systèmes offer. I am confident this will work.

The second project aims at developing Exalead on its existing SBA positioning. I will wait and see. I believe that a company on a emerging market needs to be focus and independent to create the best partnerships, to choose the best early customers, etc… Exalead was already quite spread out as illustrated by the variety of its references and its poor profitability despite a good technology and some good sales. My scepticism is even more acute since I foresee that Dassault Systèmes will not accept continuing financial losses.

* * *

As said, Sinequa becomes de facto the European leader after Autonomy among enterprise search “pure players”. Wether it be in SBA or in Enterprise Search, this opens very nice possibilities. At a moment when our product has demonstrated its superiority on all competitors when it comes to large infrastructure project or large internal search projects, I come to hope of a future where it would be our turn to shape this market, at a European or even global level.

Congrats to Exalead for a very fine rodeo, and it is now time for Sinequa the new independent European leader to show what it can do. I’m expecting to make announcements in a near future.


  1. Nice post. Note that you appear to be losing some characters/words so I'd make sure you aren't using an escape characters by accident such as less-than signs or such.

  2. Thanks. I think I have corrected this. I enjoyed reading yours too:)

  3. Jean, I agre with your overall take on the merger. Our analysis is mostly aligned with yours ( We'll see what Dassault Systemes will do Enterprise Search. Good luck to Sinequa.

  4. Thanks to Lynda Moulton from the Gilbane Group for her comments on this post

  5. I agree with the positive spin for the industry but sure would like to see the business case behind that multiple.

    Does anybody have an idea how much was invested in Exalead ?

  6. According to the information available at public filling, 39,1M€ were invested by their main financial investor Qualis, out of which 26.5M€ were actually incorporated in capital increase.