KKR and Amadeus to restructure Clicktale

Shlomi Hagai Photo: PR

Two international funds are holding funding rounds to speed up growth of the Israeli digital experience analytics company.

International funds Kohlberg Kravis & Roberts (KKR) and Amadeus Capital are stepping in with restructuring and financing rounds to speed up growth of Israeli digital experience analytics company Clicktale and kickstart it out of its slowdown. Clicktale CEO Tuval Chomut is leaving the company, and will be replaced by CFO Shlomi Hagai. Two financing rounds are planned for Clicktale: an internal round of unknown size and a $15-20 million strategic round to support development and expansion of the company's market.

Clicktale has developed technology for analyzing the user experience and web surfers' behavior. The technology enables website owners to improve their websites and marketing tools, increase the surfers' conversion ratio (buying decisions), and lengthen their stay on the website. The company monitors the surfers' mouse movements, keystrokes, etc., and creates a map that highlights the active areas of the website and the surfers' behavioral psychology.

Clicktale was founded 13 years ago by executive chairman Dr. Tal Schwartz and Arik Yavilevich. The company has 240 employees: 150 in Ramat Gan and the rest in its offices in New York, San Francisco, and London. Clicktale charges customers an average of $270,000 a year. It has 300 customers, is growing at a 20% a year clip, and its revenue amounts to tens of millions of dollars a year. Sources in the sector believe, however, that KKR expects faster growth from the company. In an August 2017 interview, Chomut said that the company's annual growth rate would reach 40-50%, and annual revenue would reach $100 million, but the company is not expected to reach this goal.

The number of Clicktale's employees has been unchanged for some time, despite Clicktale's announcement last year that it was recruiting dozens of employees. Sources in the sector believe that the company was unable to utilize a strategic change it initiated - a switch to enterprise customers, instead of the small and medium-sized businesses on which it previously focused. This was due to technological constraints and a business model based on human consultation services, which is less suitable for large companies.

Hagai told "Globes" that the aim of the company's new measures was to continue its growth and increase the number of its customers in the strategic framework of penetrating more markets in developing economies in Asia and South Africa. He added that the previous CEO and the Clicktale's board of directors had jointly decided that Chomut would leave the company after three and half years in the job.

Before his current position, Hagai was CFO, with responsibility for financial and operational measures. Before joining Clicktale, he was CFO of CellTick for 11 years and manager of its Livescreen unit. He was previously CFO of MTS Systems (Nasdaq: MTSC).

Strong response by funds to financing round

Clicktale has raised a total of $65 million to date in both three financing rounds and bond issues. Amadeus first invested in Clicktale in 2013 as part of a $17 million financing round, while KKR hopped on board in 2015 in the framework of a $35 million financing round, when COO Chomut was appointed CEO. KKR and Amadeus are currently working on an internal round for the company from its existing investors, and also on a $15-20 million financing round from external investors who will bring added value to the company. Hagai says, "The main goal is to create a company that both grows and adapts its operations to the market."

Clicktale also raised debt from Viola Credit, and replaced it in June 2018 with a $10 million venture lending round from Kreos Capital. YL Ventures, one of Clicktale's first investors, sold its investments to Amadeus in 2014. Other investors in Clicktale include Gal Chet, Axess Ventures, and Goldrock Israel Growth Fund.

"Globes": Is KKR satisfied with its investment in the company?

Hagai: "KKR is a very loyal private equity fund that has invested tens of millions of dollars, with another round planned. They believe in the investment and believe in my ability to take the company forward."

What is the company value for the current financing round?

"The current round is internal, and there are a lot of investors around, so I prefer not to talk about valuations. But the response by private funds and venture capital funds around the world and from Israel interested in joining and investing in the company is very strong."

Clicktale's customers include companies such as Avis, Heathrow, Office Depot, Royal Bank of Scotland, Samsung, Sky, Virgin Media, T-Mobile, Metlife, and new Fortune 500 customers, including computer company Dell and insurance company USAA. Hagai says that the company's business partners, including AWS, Google, Adobe, Oracle, and Salesforce, are pushing Clicktale forward by integrating its product in their platforms.

Is competition in the sector affecting sales?

"We see competitors emerging in recent years who are smaller than us in number of customers and experience, such as Decibel Insight, ContentSquare, Glassbox, and Quantum Metric. We're vying with them, but we still dominate this market."

KKR, founded in New York in 1976, is an aggressive company that manages $130 billion in assets through a series of funds, including private equity funds that invest in companies with large revenue, frequently through leveraged buyouts. Lucian Schoenefelder, who manages KKR's investments in Israel and Europe, represents KKR on Clicktale's board of directors.

Another Clicktale director, Amadeus founder and general partner Richard Anton, told "Globes" that Clicktale still led the market, and that the company's strategic measure had been successful, with Fortune 500 companies joining the company. He did not comment on the company's financial data, but expressed confidence that new CEO Hagai would lead Clicktale to substantial achievements. "They have a great future," Anton said.

Published by Globes, Israel business news - en.globes.co.il - on February 19, 2019

© Copyright of Globes Publisher Itonut (1983) Ltd. 2019

Shlomi Hagai Photo: PR
Shlomi Hagai Photo: PR
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