M&A Alert—July 14, 2009
Nuance Agrees to Acquire Jott Networks
Transaction Size: Undisclosed
Jott provides voice-to-text translation products that allow conversion of voice messages into text emails, SMS or application updates (Salesforce.com currently). Products include Jott Assistant, Jott Voicemail and Jott for SalesForce. Initially offered at no cost in 2007, Jott’s products were converted to subscription pricing in 2009, ranging from $3.95 to $12.95/month. Jott was founded in 2006 by John Pollard and Shreedhar Madhavapeddi and is located in Seattle, WA.
Nuance (NASDAQ: NUAN) provides a wide array of speech user interface solutions for businesses and consumers. Products include speech recognition, text-to-speech and voice-to-text conversion software. Prior to Jott, Nuance had made numerous recent acquisitions including AOL’s Tegic Communications ($265mm), SnapIn ($254mm),Phillip’s Speech Recognition Systems ($96mm) and ZiCorp ($35mm). Mike Thompson, Senior Vice President and General Manager of Nuance Mobile, was the internal driver behind the acquisition.
No financial information was disclosed in relation to the acquisition. Jott had raised a total of $6.4m in funding to date, securing seed funding of $1 million in December 2006 fromAckerley Partners (Christopher Ackerley), Atomico Ventures and Foundation Capital, and additional $5.4 M funding in May 2007 led by Bain Capital Ventures (Ajay Agarwal) with participation from all existing investors. Jott’s revenues upon acquisition were likely quite low given only recently converting to a subscription price revenue model.
Jott’s products and technology fit nicely with Nuance’s voice user interface product set. Nuance intends to package Jott Assistant with its voice product set marketed to mobile carriers and utilize Jott’s CRM integrations (such as Jott Saleforce) with its enterprise clients and distribution relationships. Jott also represents Nuance’s first direct to consumer product although it remains to be seen how much emphasis Nuance will continue to place on Jott’s direct to consumer efforts. Jott has several competitors including SpinVox, GotVoice and YouMail.
Architect Partners’ Observations
Although speech user interface products have now been around for decades, the technology is increasingly effective and use cases, particularly in the context of mobile devices, are increasing rapidly. We believe this is a sector that will show increasing strategic importance over the next several years with Nuance and competitors such as SVOX well positioned to benefit.
Nuance is an extremely aggressive acquirer and continues to solidify its leadership position in all types of speech interface technologies.
Given the facts surrounding the transaction, we believe the transaction value in this case was relatively modest.