SaaS Journal

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CDC Software Corporation on Monday announced it signed binding term sheets to acquire two additional software as a service (SaaS) enterprise solution businesses as part of its previously announced strategy to expand its offering in the growing on-demand software market.

Two key recent acquisitions that are at the center of CDC Software’s SaaS expansion strategy are: CDC gomembers, a provider of SaaS enterprise solutions for the Not-For-Profit (NFP) and Non-Governmental Organizations (NGO) market and Truition, an on demand e-Commerce platform provider for retailers and brand manufacturers. CDC Software has adopted an acquire, integrate and grow strategy that is fueled by its global scalable business and technology platform that features an infrastructure of multiple complementary applications and services, domain expertise in vertical markets, cost effective product engineering centers in India and China and a worldwide network of direct sales and channel operations. By leveraging this platform, CDC Software has achieved a successful track record of integrating software companies that typically match a subscale profile and fit synergistically, as well as add new functionality within the company’s product roadmap. CDC Software’s business and technology platform also help integrate its acquisitions by driving more cross-sell synergy to its 6,000 customers globally, eliminating redundant expenses, streamlining efficiencies and positioning these businesses for organic growth and profitability.

As testament to CDC Software’s growth and profitability, CDC Software recently announced it projects 37 percent growth in quarterly license revenue over the average for the first three quarters of 2009 and 30 percent growth in organic license revenue for its Q4 2009 results, and estimates an increase in Adjusted EBITDA margin to about 27 percent in 2009, an improvement over 2008 and 2007.

The acquisitions announced today are expected to be integrated into the CDC gomembers product line. Both are privately held and include venture-financed technologies that CDC Software believes complement the gomembers’ enterprise suite. The first potential transaction includes association management software with integrated web modules and web collaboration tools that automate processes including membership, events services, communications and financials. The second potential acquisition provides enterprise resource planning and financial management for state and local governments, as well as donor and member-based NFPs, in North America. The state and local government offering is expected to allow the gomembers enterprise solution to expand into a large market within the NFP space that CDC Software believes is typically a good fit for SaaS solutions. According to market research from INPUT, local government spending for software is expected to grow from $6.9 billion in 2009 to $9.1 billion by 2014. This company’s customers range from small communities and villages to national governments, as well as donor and member-based NFPs, in the U.S. and in the Pacific region.