Broadsoft Raises a Warchest

The software and UC platform provider Broadsoft announced this morning that it is tapping the credit markets. They intend to raise $175M or more by selling senior convertible notes due 2022, far more than they need for a mere refinancing.

Broadsoft says that $60M of that sum will be used to repurchase a portion of its 1.5% convertible senior notes due in 2018, and another $25M will go toward buing back shares. The remainder of $90M will be kept for general corporate purposes, with the only explicitly mentioned one being the acquisition of or investment in complementary businesses, products, or technologies.

With all the consolidation activity going on in the business VoIP space, the landscape has been changing rapidly. But with consolidation in the VoIP world comes a widening of product sets into other cloud and communications technologies.  Broadsoft has been actively expanding its offerings to meet that need.  In January they bought Leonid while in June they closed a deal for the UC professional services company mPortal, and it looks as if they have an appetite for more.

With their SaaS platform gaining scale, it may plenty of sense to scale that platform laterally as well into other cloud-based products that their customers sell to the enterprise.  That’s the direction I’ll be looking in for the next move, anyway.

On the other hand, Broadsoft has quite a bit going on organically. The company has been expanding its workforce dramatically, reaching 1,162 at the end of Q2 after finishing 2014 at 867.  That expansion has been in anticipation of revenue growth from the accelerating transition to IP voice around the world.  A cash cushion could help alleviate worries about the timing of that revenue growth.

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Categories: Financials · Mergers and Acquisitions · VoIP