Active Network Is Game for Taking on New Challenges
Firm Expands Outside of Athletics; Market Cap Approaches $900 Million
By MIKE ALLEN Monday, September 5, 2011
What began as an online registration business catering to runners now helps folks make reservations at golf courses, schedule business meetings at corporate conventions, and manage activities for churches.
A lot has changed for The Active Network, which raised a net $115 million after fees in its initial public offering in May. But in many ways, the company’s strategy hasn’t changed at all, says Dave Alberga, who’s headed the fast-growing cloud-based, software-as-service business since 1999, nearly all of its existence.
“We continue to expand our available market and the vision of what the company is has continued to get bigger and bigger as we learn more about the space,” Alberga said.
What’s definitely gotten bigger is Active Network’s revenue. In 2000, the business had $1.2 million in sales. Last year, Active pulled in $280 million, up from the prior year when it did $243 million in revenue.
For the first half of this year, Active reported a net loss of $5.4 million on revenue of nearly $172 million, compared with a net loss of $14.3 million on revenue of $144.8 million for the first half of 2010.
In the second quarter, Active broke into the black for the first time, logging a net profit of $5.5 million, and thanks to a rebound in its stock, its market capitalization is nearly $900 million.
Attracting Investors, Buyers
The double-digit top line growth has stayed true from the outset and was one of the main reasons venture capital investors poured about $290 million into the business during the past decade. An early dot-com (its former name is Active.com), the business attracted offers from buyers several times and planned on going public several years ago, but the timing and the prices weren’t right, Alberga said.
The financial results for Active always were showing red ink because of all the long-term investments the company was making, and didn’t reflect the real value of the company so management passed, he said.
The Active Network is benefiting from the ongoing transition many organizations and groups are making — from pen and ink forms to online registration and management for the events and services they organize and stage, said Mike McGuire, a media analyst with Gartner Inc.’s office in San Jose.
While the business has obviously carved out a prominent position in its marketplace, competitors can quickly pop up and get into the same line, McGuire said.
Going public is a dramatic step for any company and while there are clear advantages, such as the ability to obtain more investor funding and improved recognition, there’s a new level of disclosure that requires enhanced oversight and careful management, “and these are not trivial requirements,” McGuire said.
“There are things like personnel moves, and customer wins and losses that are now important to a bunch of third parties who have more expectations,” he said.
Secure Position
Alberga, a graduate of West Point and a triathlete, seems undeterred by others honing into a clearly fast-growing pie. He said the North American market alone generates about 1.7 billion registration transactions annually, representing some $110 billion in total fees paid. If The Active Network captures the entire pie, the business would get about $10 billion in sales, he said.
As of most recent reports, Active has 47,000 customers and collected fees on some 70 million transactions, taking an average of 8 percent on the fees, Alberga said.
Active’s systems provide its customers with more data and the ability to increase interaction with the people who are signing up for events or paying for a camp site permit, Alberga said. In the past, organizations had little or no contact with customers after they register for some event or class. Using Active’s automated systems, customers can do a better job of retaining their business, and expanding the services offered by these customers, he said.
As Active Network’s growth soars, its employment base is also expanding. Its most recent headcount is 2,700 including about 500 in its Sorrento Valley headquarters, up from about 400 a year earlier.
Some 1,000 of those workers are software engineers, who are tough to find, Alberga said. The big need is software coders experienced with Java and other computer languages, quite scarce in these parts.
Yes, going public is a big step, says Alberga, but that isn’t going to change the way the company operates.
“The stakes may be higher than they were before … but previously we took our commitment to our shareholders really seriously and we’re just continuing to do that.”
THE ACTIVE NETWORK CEO: Dave Alberga.
Revenue: $280 million in 2010;
$243 million in 2009.
Net loss: $27 million in 2010; $37.8 million in 2009.
No. of local employees: 500.
Year founded: 1998.
Stock symbol and exchange: ACTV on the New York Stock Exchange.
Company description: Provider of cloud-based computing services serving diverse market segments including sports, outdoors, community activities, corporate and churches.
Key factors for success: Empowering event organizers to better manage events and build communities around activities; strong operations focus with strategic growth through existing and new markets.
