Meetings technology firm Cvent on Friday confirmed it would merge with a special purpose acquisition company with the intention of going public in the fourth quarter of 2021 and released an investor presentation that details the company's financial performance as well as a growth strategy centered on the potential of virtual and hybrid events.
Cvent confirmed that it would merge with SPAC Dragoneer Growth Opportunities Corp. II to create Cvent Holding Corp., as reported Wednesday by The Wall Street Journal. Current Cvent owner Vista Equity Partners, which in 2016 purchased Cvent for $1.65 billion, would roll all its Cvent holdings into the new entity, as would Cvent management. Cvent Holding Corp. would then go public during the fourth quarter, the companies said, contingent on approval by Dragoneer's shareholders and other closing conditions. The boards of directors of both companies have approved the deal, the companies said.
The SPAC also enables investment of other companies at $10 per share, a figure that values Cvent at $5.3 billion. Among those investors are Fidelity Management & Research Co., Hedosophia, Oaktree Capital Management and virtual conferencing stalwart Zoom Video Communications.
"We believe that Cvent's event technology is complementary to what we offer as a video communications leader, and our organizations already have a long track record of working together as technology partners and as users of each other's solutions," Zoom CFO Kelly Steckelberg said in a statement. (Zoom CEO Eric Yuan has invested in Cvent competitor Bizly.)
The transaction would provide Cvent with $801 million in cash, which the company said would enable it "to accelerate product innovation, increase research and development, reduce debt, and expand go-to market activities."
Financial Information
Along with the announcement of the Dragoneer merger, Cvent, still privately held, released financial data covering the past few years as part of a presentation to investors. The company for 2019 reported $572 million in adjusted revenue, up 19 percent year over year. In pandemic-ravaged 2020, the company's adjusted revenue fell about 13 percent year over year to $499 million. Considering the drastic drop-off in live events after March 2020, that revenue figure is perhaps surprisingly sturdy, to which Cvent CFO Billy Newman in a webinar for investors attributed to Cvent's preponderance of multi-year deals with clients that rely on "sum-certain" pricing, instead of commission-based pricing.
Subscription revenue makes up about 79 percent of Cvent's annual revenue, and 58 percent of its client contracts are multi-year deals, according to the company.
Cvent estimates total 2021 adjusted revenue will increase 1.7 percent to $507 million, then increase far more substantially in the two subsequent years, to $623 million in 2022 and $763 million in 2023.
While a return to face-to-face meetings in the second half of 2021, with the lifting of some Covid-19 restrictions, and beyond helps to fuel those projections of revenue growth, the development of Cvent's virtual and hybrid solutions are a key pillar of its strategy to remain the largest provider of meetings technology services.
Betting on Virtual
Cvent in August 2020 unveiled its virtual event solution, a few months after Covid-19 shut down most in-person events and in time to power its own annual Cvent Connect client conference.
"When Covid hit in March of 2020, companies were suddenly forced to move all their events virtually," Cvent founder and CEO Reggie Aggarwal said during the investor webinar. "Unfortunately, at the time, Cvent didn’t have a virtual event solution, so we redeployed the majority of our 1,100-person tech staff and in just five months, we developed the next-generation virtual solution."
Cvent through the virtual platform had 40,000 attendees at the 2020 Cvent Connect, compared with 4,200 at the in-person 2019 event, and Aggarwal called it "an amazing success." Subsequently, the Virtual Attendee Hub became what Cvent called the fastest-growing business line in its history, with $69 million in bookings between September 2020 and June 2021. When adding other Cvent virtual-meeting technology modules, including registration and exhibitor management, for example, the volume of virtual-related bookings in that timeframe totaled about $266 million, according to Cvent.
Still, as of June 30, only 12 percent—about 1,300 organizations—of Cvent's installed-base customers have purchased the virtual module, leading to what Cvent calls significant opportunity given what it considers the solidification of virtual and hybrid events in the meetings management landscape.
"We literally have hundreds of customers that have already more than doubled their spend with us, and we're still in the early stages of adoption," Aggarwal said in the investor webinar of the virtual meetings technology. "Over the next 12 to 18 months, we expect thousands of customers will make this transition, and over the next three to five years, we believe it's going to be virtually all of our customers and prospects, because, don't forget, the attendees want to engage with these organizations on their terms. So, every organization is going to need to provide all three event delivery modes to stay relevant," he added, referring to virtual, hybrid and in-person meetings.
Cvent said it had about 23,000 customers as of May 31.