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American move pays dividends for Globoforce

26 November 2006 Dublin internet company Globoforce had revenue of €15.8 million last year, an increase of almost 250 per cent on 2004.

The company, which provides online incentive programmes to big international companies, reduced its pre-tax loss to €1.6 million last year from €3.4 million in 2004. Its revenue in 2004 was €4.6 million.

Eric Mosley, chief executive of Globoforce, said that last year’s figures were the result of years of work and investment.

‘‘We knew a couple of years ago that the opportunity for our product was mostly in the US,’’ Mosley said. ‘‘We have invested in building scale there."

Globoforce’s business was initially focused on Ireland and Europe, but its revenue slumped in 2004 because of a change in Irish tax law relating to benefit-in-kind for employees.
After the shift in business to the US, about 80 per cent of its revenues now originate from US firms.

‘‘A number of large multinationals in the US have decided to run their worldwide awards schemes on our platform," Mosley said.

In the past year, the company has signed deals with some of the biggest companies in the world, each with more than 100,000 employees.

Globoforce’s customers include Procter & Gamble, Dow Chemical, IBM, Reuters and Avnet, which use the firm’s technology for employee incentive schemes.

‘‘The larger and more dispersed the employee base a company has, the bigger the opportunity for us," Mosley said.

The company has won awards for the system used by Dow Chemical, which has 50,000 employees in 62 countries, according to Mosley.

‘‘Every employee is on our platform, using it for hundreds of thousands of awards," he said. The Reuters installation has also won awards.

Mosley said that Globoforce was meeting the targets in its business plan and would continue to increase revenue and cut its losses.

He would not give a revenue forecast for this year, but said Globoforce continued to grow and expected " fantastic growth year-on-year’’.

Globoforce has joint headquarters in Dublin and in Boston, where Mosley and other senior executives are based.

He said the firm was investing in sales and marketing in the Boston office, but its technical headquarters would remain in Dublin, where about 50 of its 70 staff are based.

Mosley said that Globoforce faced competition from smaller companies in some markets, but ‘‘very, very few can respond to global opportunities’’.

He said the company would monitor the possibility of buying other firms, but was not actively considering acquisitions.

Globoforce is backed by international venture capital firms Benchmark Capital and Atlas Ventures, which invested €7.5 million in the firm in 2004.The company has raised about €13million in total funding since it was founded in 1999.

The firm also obtained loan finance of €3.2 million last year, according to its accounts, and recently increased the loan facility to €4.4 million. Mosley said the funding should bring Globoforce to profitability under its current business plan.

While the company had an accumulated loss of almost €9.9 million at the end of last year, it still had €2.4 million in shareholders’ funds and more than €3 million in cash on its balance sheet. It was also owed almost €4 million by trade debtors - a good indication of future business.

‘‘All in all, we had a great year," Mosley said. ‘‘We were happy with the revenue growth, the increase in employees and third-party recognition."

He said the company had also introduced new versions of its technology, including features to monitor which employees were using the system.