Mailchimp Inc., one of the biggest providers of software-as-a-service digital marketing tools, could reportedly be acquired in a deal worth $10 billion or more.

Bloomberg reported the news on Wednesday afternoon, citing sources familiar with the matter. The sources said Atlanta-based Mailchimp has received interest from private equity firms and unnamed “large technology firms.” 

Given the reported $10 billion-plus asking price, which is higher than the valuation of some publicly traded companies, the unnamed tech firms said to be interested in buying Mailchimp likely include some of the enterprise software market’s biggest players. However, the sources noted that an acquisition is not the only possibility on the horizon. Mailchimp is also said to be looking at selling only a partial stake.

Mailchimp reportedly generated earnings before interest, taxes, depreciation and amortization of $300 million last year. In 2019, the company disclosed that it was on track to reach annual revenues of $700 million. Mailchimp generates revenue from selling cloud services that companies use to manage email outreach campaigns, design their websites and perform related marketing tasks. 

Unusually for such a large startup, Mailchimp has never raised any venture funding and is owned entirely by the founders. The company was started in 2001 at a time when the now highly crowded market for digital marketing tools had relatively few players.

Mailchimp remained a fairly small operation for several years until 2009, when it decided to launch a free version of its software. The company’s installed base grew to 450,000 users within a year and, by June 2014, it was sending more than 10 billion marketing emails a day for its customers.

Mailchimp’s flagship product is a cloud service of the same name that companies, particularly small and midsized businesses, use to send email newsletters to customers. The service not only provides features for coordinating the distribution of promotional messages but also helps companies with related tasks such as newsletter design.

Over the years, Mailchimp has expanded into other parts of the marketing software segment. The company provides software that allows online retailers to link its email service to their e-commerce websites and automatically send customers promotions at opportune moments. For new businesses, Mailchimp offers tools that they can use to create an online store from scratch as well as launch digital ad campaigns.

It was reported as early as 2019 that tech companies and private equity firms had expressed interest in purchasing Mailchimp. The company’s reported evaluation of a sale comes amid a broader trend of consolidation in the email marketing software segment. 

One of Mailchimp’s main competitors, SendGrid, was acquired by Twilio Inc. for $2 billion in 2018. More recently, marketing startup MessageBird B.V. this year inked a $600 million deal to buy SparkPost Inc., whose platform is used to distribute about a third of the world’s commercial emails.

One of the reasons why Mailchimp could reportedly be sold for a sum much higher than the prices its competitors fetched may be its presence in the rapidly growing e-commerce market. Earlier this year, the company disclosed that it has some 14 million customers, 40% of which operate in the e-commerce industry.

For a potential acquirer, Mailchimp’s extensive installed base of e-commerce companies may present significant revenue growth opportunities. Online retailers are deploying a growing number of software tools, from product catalog search engines to marketing automation services, to help them generate more sales. In the future, Mailchimp could potentially capture a bigger portion of this software spending across millions of online retailers by adding more e-commerce tools to its product portfolio. 

The company’s growth opportunities in the lucrative e-commerce software segment may partly account for the $10 billion-plus selling price it’s reportedly seeking. 

Photo: Mailchimp