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Jive Software - Initiation Note

Jive Software

NEUTRAL (JIVE, $4.43)

Social Enterprise–Initiating With A NEUTRAL Rating

August 24, 2016

Ilya Grozovsky

212.417.8219

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Investment Conclusion.We are initiating coverage of Jive Software with a NEUTRAL rating based on our belief that while the company is well positioned to benefit from the growth of social enterprise software, we believe that the company’s valuation (combined with its minimal growth outlook) implies that the shares are fairly valued. Social enterprise software is a market that has become an increasing focus for businesses globally and allows them to engage employees inside and outside of the firm on a much higher and more effective level. Jive’s revenue growth has slowed dramatically from its past and we believe that for the foreseeable future, low single digit revenue growth is in the cards as a result of increasing difficulty selling to enterprises given the competitive environment. We are establishing 2016 and 2017 revenue and adjusted EBITDA estimates of $202 million and $3 million, and $210 million and a loss of $9 million, respectively. The comparable companies group trades at a 2.7x calendar 2016 EV/Revenue multiple and at 2.3x calendar 2017 EV/Revenue multiple. Jive currently trades at 1.7x and 1.6x to 2016 and 2017 EV/adjusted EBITDA, respectively. Despite a discount of approximately 45% based on 2017 EV/Sales ratios, we believe that shares of Jive are fairly valued given our projection of low single digit revenue growth in the coming year. If the company could grow revenues in the double digit range we would revisit our rating on the shares.

JIVESource: Company Reports, National Securities Corporation Estimates

Company Profile

Jive Software, Inc., headquartered in Palo Alto, CA, is a provider of software for social business platform solutions. The Company's products are primarily offered on a subscription basis, deployable in a private or public cloud and can be used for internal or external communities. The Company's traditional enterprise software product offerings, based on the Jive Platform, are provided to customers as cloud-based or on premise solutions. The Company's Jive Platform product offerings are delivered either as Jive Internal for employee networks or Jive External as a platform for public communities....


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