Three times is a charm for Mike Kelly, who recently sold his tech-focused accounting firm Tactical Cloud on undisclosed terms to national player Eide Bailly LLP in North Dakota.
“We’ve been growing quite rapidly,” said Kelly, who began the Costa Mesa-based company in 2015. “We couldn’t sustain that growth. We needed more bench strength.”
Tactical, which specializes in enterprise resource planning and customer relationship management software consulting, has attracted more than 100 clients, pushing annual revenue past $5 million.
Eide Bailly is reported to have annual sales in the $290 million range.
Local customers for Tactical Cloud include Irvine-based cybersecurity software maker Cylance Inc. and San Clemente-based medical device maker Glaukos Corp. (NYSE: GKOS).
Over the last year or so the firm was increasingly competing against Fargo-based Eide Bailly for projects in and around Orange County, Kelly said.
“We got to know each other,” Kelly said. “Eide Bailly wanted to get into the Southern California market really bad. We went with Eide Bailly because they are the strongest nationally.”
Tactical has 20 employees, who will join the company, and Kelly will run the Southern California region.
The deal marks the third sale for Kelly in OC since 2006. His first was Irvine-based professional services firm Spinnaker Financial, which was bought for $3 million by Tatum CFO.
Kelly teamed up with Tactical co-founder Colleen Freeman four years later to launch Beacon Resources LLC in Newport Beach. The duo sold the executive search, interim staffing and direct placement services provider in 2014 for $12.5 million to Woodland Hills-based DLC.
During that same year, Beacon ranked No. 32 among OC’s fastest-growing private companies with a 250% revenue growth rate over two years, according to Business Journal data. The firm had an estimated $7 million in revenue in 2013, a figure that grew to $17 million by 2015, when Kelly departed to start Tactical Cloud.
Beacon was the eighth-largest management consultancy in OC last year, with 68 local employees, according to Business Journal research.
Earnings Season
Deep jobs cuts initiated by Blizzard Entertainment Inc.’s Santa Monica parent Activision Blizzard Inc. (Nasdaq: ATVI) topped the news this earnings season, with a handful of local technology companies still yet to report.
Here’s a rundown of that development and others from Orange County’s contingent of public companies in the key sector here:
• Blizzard, OC’s largest software maker by employee count, is making significant cuts at its Irvine headquarters as part of a large-scale restructuring plan disclosed by its parent company.
Activision Blizzard told analysts on Feb. 12 it will cut 8% of employment, or about 800 jobs, across all of its businesses, including Blizzard, Activision, King, and some of its studios. The firm had 9,800 employees company wide, according to its 2017 annual report.
An 8% workforce cut in Irvine would translate to about 160 jobs at the developer of the “World of Warcraft” gaming franchise.
Blizzard grew fourth-quarter revenue 15% year-over-year to $686 million and operating income 51% to $241 million. It ended the quarter with 35 million active users online, down two million from the previous quarter.
For the year, Blizzard grew sales 7% to $2.3 billion, while operating income fell 3.8% to $685 million.
• Skyworks Solutions Inc. (Nasdaq: SWKS) reported quarterly revenue of $972 million, down 7.6% year-over-year and non-GAAP operating income of $356 million, down 14%.
Both metrics missed Wall Street expectations, but a new $2 billion stock buyback program helped boost the chipmaker’s share price 11% to almost $85 after the Feb. 5 announcement. Skyworks, whose executive team is based in Irvine, was valued at about $14.2 billion.
The company has been dinged by slow iPhone sales in the U.S. and China since last year, but is viewed as a major player in the booming Internet of Things market and developing 5G connectivity.
“Skyworks remains well-positioned to gain market share with strong design wins in leading IoT verticals such as the connected home, smart grid, automotive, and industrial IoT devices,” according to a recent investor note from Canaccord Genuity LLC. “Further, we anticipate wireless infrastructure will contribute to grow with 5G and small cells trends improving.”
• Iteris Inc. (Nasdaq: ITI) in Santa Ana recorded December revenue of $23.1 million, down 11% year over year, missing a sales forecast of $24.7 million from four analysts queried on Yahoo Finance.
The decline was driven by a 17% sales decrease in transportation systems and a 7% decrease in roadway sensors, which was partially offset by an 11% increase in agriculture and weather analytics revenue.
Non-GAAP net loss was $1.5 million, or 4 cents per share, in line with estimates.
Shares are up about 20% since the Feb. 6 report, buoyed by a backlog of $83 million in contracts to date, up 15% from the same period a year ago. Iteris has a market value of about $162 million.
