Microsoft invests in Adobe rival Piano, but is it a Unicorn?

By Kirsteen Mackay

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Microsoft’s (NASDAQ: MSFT) LinkedIn just invested in a funding round for Piano, is this further evidence the Adobe rival is heading for unicorn status?

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Microsoft’s (NASDAQ: MSFT) LinkedIn just invested in a funding round for Piano, an Adobe (NASDAQ: ADBE) rival. Piano helps the world’s biggest media companies manage their user data, grow their audiences, and raise revenues.

LinkedIn was clearly impressed by Piano’s recent results and decided to get in on the action. In its latest funding round led by Updata Partners, Piano raised $88 million. LinkedIn contributed, along with Rittenhouse Ventures.

Piano Data Analytics LinkedIn

Photographer: JESHOOTS.COM | Source: Unsplash

Prior to this, Piano raised $22 million in a Series B round in January 2019. It’s since grown its revenues a whopping 400%, this is partially through acquisition. It acquired Cxense, a Norwegian data management platform in 2019 and French analytics platform AT Internet in March this year. These latest acquisitions give it a big step up in acquiring clients across Europe. It’s also expanding into the Asia-Pacific region. All-in-all Piano has made five acquisitions since 2014.

On the heels of a nearly 400% growth period, we’re delighted to announce that we’ve raised $88 million in funding led by @UpdataPartners with supporting investments from @RittenhouseVC and new investor @LinkedIn. Read more about the news here: https://t.co/bS2R0gsDQh pic.twitter.com/l10wi6cfnj

— Piano (@piano_io) May 18, 2021

400% growth

The capital investment in this latest LinkedIn-backed round will go towards improving Piano’s customer software and analytics subscription service, along with a recruitment drive.

Piano has a unique competitive edge in that it can deliver an all-round package to clients. This covers all facets of the customer journey including digital analytics and a visualisation system providing real-time behavioural data to clients.

We know by now that sleepers are at a high risk of cancellation — but they cancel at higher rates in monthly subscriptions over annual. pic.twitter.com/eunOppyd0Z

— Piano (@piano_io) May 19, 2021

Piano.io analysis

An impressive client base

Piano currently boasts over 1,000 customers, including several major companies on its books. Big names include Comcast’s (NASDAQ: CMCSA) NBC, the Wall Street Journal, The Economist, Gannett (NYSE: GCI), and the South China Morning Post.

Founder and CEO, Trevor Kaufman, also has an impressive track record. He previously ran an advertising agency called Schematic, which he sold to Britain’s WPP (LON: WPP) in 2007. In response to the latest funding round, he said:

“This funding, and the addition of LinkedIn as a strategic investor, will help us continue investing in the best technology and world-class talent, enabling our clients to create compelling, data-driven customer experiences.”

Inspiring revenue growth

And it shows no signs of slowing down, with projected revenues for 2021 reaching above $75 million.

Piano is ahead of the game with its rapid adoption of key technologies vital for competitive gain in today’s fast-paced evolution of marketing. This includes artificial intelligence (AI) and harnessing the power of big data to ensure the accurate personalization of customer experiences.

Its range of tools help manage customer retention via free and paid subscriptions. And they also provide insight into how end users are reading content. Piano also helps publishers build newsletters with or without monetization.

This is an exciting investment for LinkedIn too. Scott Roberts, VP and Head of Business Development at LinkedIn commented:

“Members are increasingly turning to LinkedIn to stay informed on the news and views that shape their respective industries – critical to this is the work we do with trusted publishers and journalists.

While Google and Facebook have long since monetized their users, LinkedIn has remained self-contained. But Piano specialises in data driven analytics and tailored subscription services to design unique content experiences. Therefore, it could help LinkedIn monetize its extensive userbase tactfully.

There are numerous ways to approach this, but some suggestions include:

  • Logging into third-party sites from LinkedIn

  • Building a profile that gives the user an opportunity to leverage their identity across sites via commenting or contributing.

  • A LinkedIn cross-platform login capability capturing content from several sources into a reader tailored feed.

Piano can bring a new level of understanding to the relationship between publishers and readers. Its tools can unlock value for both parties ensuring users are reading content that they value and enjoy. It’s also likely to help publishers improve their newsletter offerings to help build strong consumer-brand relationships.

With over 700 million users, LinkedIn has masses of untapped potential. If Piano can help monetise LinkedIn more accurately, in a way that benefits the user base directly, then it could assist in raising LinkedIn’s valuation considerably.

It may even stand to challenge Facebook at its content game, by providing more relevant, nuanced and interesting content feeds.

Roberts went on to say:

The opportunity to collaborate with Piano to help unlock more value for publisher content on LinkedIn makes it a natural strategic investment opportunity.”

Is Piano heading for Unicorn status?

The definition of a Unicorn is a start-up company achieving a valuation of more than $1 billion while still privately held.

At the moment, we don’t know what Piano is valued at. But with a $75 million annual recurring revenue, this could obtain a valuation anywhere between 8- and 25-times sales.

At 15 times sales, we’re well above $1 billion, which would give it Unicorn status. Of course, we’d need more financial insight in order to substantiate such a claim, but it seems fair to assume it’s not far off the mark.

And if it continues on its M&A path and growth trajectory it could well reach Unicorn status sooner than imagined.

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Industries:
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Microsoft

Author: Kirsteen Mackay

This article does not provide any financial advice and is not a recommendation to deal in any securities or product. Investments may fall in value and an investor may lose some or all of their investment. Past performance is not an indicator of future performance.

Kirsteen Mackay does not hold any position in the stock(s) and/or financial instrument(s) mentioned in the above article.

Kirsteen Mackay has not been paid to produce this piece by the company or companies mentioned above.

Digitonic Ltd, the owner of ValueTheMarkets.com, does not hold a position or positions in the stock(s) and/or financial instrument(s) mentioned in the above article.

Digitonic Ltd, the owner of ValueTheMarkets.com, has not been paid for the production of this piece by the company or companies mentioned above.