Alphabet Inc (NASDAQ:GOOGL) has finally completed the acquisition of Apigee Corp (NASDAQ:APIC) for $625 million, or $17.40 a share. But what’s Apigee bringing to the table?
Although Alphabet has several moving parts, Apigee is set to find its position in the company’s cloud division – Google Cloud. The API (Application Programming Interfaces) technology that Apigee is bringing on board could help Alphabet bolster its cloud campaigns and help it claw market share from market leaders Amazon.com, Inc. (NASDAQ:AMZN) and Microsoft Corporation (NASDAQ:MSFT).
API is what allows computer programs to work together and it is becoming increasingly important as companies transition their systems to the cloud. Perhaps the value that Alphabet sees in Apigee’s API technology explains why the company decided to pay a 6% premium for the acquisition.
Big-name customers
Apigee counts AT&T Inc. (NYSE:T), Walgreens Boots Alliance Inc (NASDAQ:WBA) and Burberry Group among its customers. In a recent investor update for 3Q16, Apigee said it has more than 335 customers, more than double 130 customers it had in the same period last year.
3Q16 earnings
Besides technology, Apigee is also bringing talents and revenue to Alphabet. For 3Q16, Apigee generated revenue of $25.1 million, up 34% YoY and within internal projections for revenue of $24 – $25.5 million. The company’s bottom-line also improved in the last quarter to adjusted EPS loss of $0.21, down from EPS loss of $0.38. The company guided for EPS loss in the band of $0.27 – $0.30 for the quarter.
Full-year guidance dropped
Following its acquisition by Alphabet, Apigee said the financial performance outlook it issued earlier was no longer valid. The company had guided for full-year revenue in the range of $90.9 – $92.4 million. EPS loss for the year was projected in the range of $1.11 – $1.14.
Apigee, which Alphabet now hopes would help it catch up with competition in the cloud, went public in April 2015 at $17 a share. But the company struggled after the IPO, with employees expressing frustrations at many points.