MySQL, JBoss, Zimbra...What is an open-source company worth? - ZT

Details ......

While MySQL has not disclosed revenue for 2007, it is believed that its revenue in 2006 was $34 million, up from $16 million in 2005 and $14 million in 2004. We estimate trailing 12-month (i.e., 2007) revenue to be about $48 million, and if we assume slightly slower growth in 2008, we get to about $65 million....Given that, it would mean Sun is paying 20.8 times trailing 12-month revenue and 15.4 times projected 2008 revenue.

JBoss? 2005 revenue was $17 million and bookings were roughly $27 million. Red Hat acquired JBoss in 2006 for $350 million. This represents a multiple of 20.6 times trailing 12-month revenue or 13 times 2005 bookings. That's not a wide divergence from the valuation multiple MySQL got (but both are a lot better than the multiple that BEA Systems got for its stock from Oracle).

Zimbra? $6 million in bookings that fed into a $350 million valuation, though it's probably better to use the $20 million in bookings it was on track to hit in 2007 before the acquisition. At that number, it's a 17.5 multiple on bookings projecting to the end of 2007. More likely, it was a multiple on bookings in the range of 12 to 15. In other words, very close to the same multiple for MySQL and JBoss.

XenSource had around $1 million in 12 months trailing revenue. It didn't have much more in bookings. So, at a purchase price of $500 million, that's roughly a 500x multiple. Few are going to see that....

What XenSource did have was a looming OEM win with a major software company and the VMware hype. The lesson from this (as well as JBoss and MySQL) is that it's easier to get a high valuation if you're in a hot market and/or are a category winner. Not everyone will be in this position, so including XenSource didn't seem to make much sense.