Mobile phones are not just a staple of everyday living. They
have rapidly taken over the world of business and
It's whatTangoe (
) President and CEO Albert Subbloie calls the "mobile
revolution." With that comes an increased responsibility to
manage the calling plans efficiently and to control associated
"Mobile devices have proliferated," he says. "And when you
have thousands of employees carrying mobile devices and needing
access to the corporate systems, and with all the changing plans
and the many carrier relationships throughout the world, add
tablets to the mix, (it) complicates it even further."
Businesses need a company like Tangoe to manage their
corporate communication spending. The Orange, Conn.-based firm
makes software to help with the lifecycle management of the
communications assets of those businesses. Services include
planning, sourcing, inventory and use management, accounting as
well as procurement and asset disposal.
"The requirement to manage the asset, the expenses and the
usage on those devices is something that most companies have a
very difficult time doing," Subbloie added. "And as a result of
that, they spend too much money. And if you consider the employee
needing to be connected to the enterprise, without that
connection you're not productive today. Not having the right
device, the right time, the right plan, the corporate access to
applications, makes for a company not as competitive as
While in the past, companies would contend with quick, simple
solutions to their mobile problems, the market is transitioning
to where they need an overall solution that helps them manage the
entire mobile environment.
The industry has coined the term Managed Mobility Solutions,
or MMS, for that.
"MMS is a total solution (for when) a CIO of a large
corporation . .. says, 'Oh my God, mobile has become my new IT
infrastructure overnight, and I don't really have a good handle
on it,'" he said. "I think the world is moving toward a total
Tangoe's MMS is composed of advising clients on various
aspects of their communication needs and helping them make
strategic decisions. It also includes activating and managing the
mobile devices of the employees as well as real-time use and
expense management and 24/7 support.
Out of the total global enterprise telecom spending of $425
billion, $24 billion are managed by Tangoe. As a result, there is
plenty of room to grow, especially since it operates in a
"The market is still quite underpenetrated with Tangoe as the
only large independent vendor," wrote Barclays Capital analyst
Raimo Lenschow in a research report. "There is still plenty of
room for growth in acquiring both new customers and further
cross-selling as the solution represents a compelling ROI for
That's why Tangoe has been significantly expanding its sales
force, in the U.S. as well as internationally. The company is
already reaping results from this increased capacity. It reported
39 new customer wins in the first quarter, outpacing its own
guidance of 25 to 35 logo additions per quarter.
In the Asia-Pacific region, it now has offices in Australia,
China and India. It is further planning to expand into Hong Kong
and Japan. In Europe, the company maintains offices in the U.K.,
Netherlands and Germany, fully staffed with a sales and support
team. It also has presence in Latin America.
About $6 billion, or 25% of the mobile IT spending it manages,
comes from the outside of the U.S. Recently, the company gained a
new client,Nokia (
It currently has 750 customers in the fields of health care,
finance, technology, consumer and consulting services
Reaching about $155 million in sales in 2012, Tangoe generates
35% of its revenue from direct sales, while 25% comes from its
alliance partners. One of the partners isAT&T (
), where Tangoe is a white-label provider of its services.
After going public in July 2011, the stock had an incredible
run for about a year. However, in August 2012, several short
reports sent the stock tumbling as investors questioned the
integration of several acquisitions Tangoe made.
When acquiring a new company, it takes 12 to 18 months for
Tangoe to transition it to its own systems and to start seeing
results. Most of the revenue is recurring, however, and therefore
predictable. As Tangoe is integrating its latest buy, Symphony,
it is starting to shift its focus to organic growth.
"I am less open to acquisitions," said Subbloie. "We didn't
plan on being that active. We're opportunistic, as we should be.
But now that the company has scaled as large as we have become,
and when you look at the scale choices that are left, in terms of
the independent companies that are left, there is really nobody.
There might be 10 companies between $8 million and $12 million in
sales, because we've more or less consolidated a lot of the
Analysts are predicting that expanded capacity and results
from acquired companies will continue to drive revenue growth in
the second half of 2013. It has also been cross-selling products
to its existing clients.
"The strong new logo adds the past several quarters will only
start impacting revenue in the second half of 2013, which makes
us more confident in the organic growth acceleration that
management is calling for," wrote Lenschow.