January 4, 2018 / 9:20 PM / 19 days ago

Datawatch hires adviser to handle acquisition approaches: sources

SAN FRANCISCO (Reuters) - Datawatch Corp (DWCH.O), a U.S. data analytics software company, has hired a financial adviser after receiving expressions of interest from potential acquirers, sources familiar with the matter said on Thursday.

The discussions that Datawatch engages in may not lead to any deal, or may result in other outcomes, such as a commercial partnership, the three sources said, requesting anonymity to discuss the confidential matter.

No sale process is underway, the sources added.

Datawatch, which has a market capitalization of around $115 million, did not respond to a request for comment.

Datawatch helps companies prepare and organize data. It competes with larger companies such as Alteryx Inc (AYX.N), which went public last year.

Like many traditional software companies, Datawatch, which was founded in 1985, has been shifting its business model from selling software for large upfront payments to monthly subscription fees. This change can often result in a bumpy financial performance.

Datawatch trades at a revenue multiple of roughly 2.0, below the 3.7 average for the enterprise software and IT services sector, according to Thomson Reuters data.

    Datawatch was the target of an activist investor campaign by hedge fund Potrero Capital in 2016. Potrero had urged the company in a presentation in March 2016 to hire a financial adviser to pursue strategic alternatives. The company later reached an agreement with Potrero Capital and added a new director to its board. That director, Charles Gillman, has since left the board.

    Datawatch narrowed its net loss to $4 million in fiscal 2017, from a net loss of $14.63 million a year earlier. Annual revenue rose 19 percent to $36.26 million from $30.46 million a year ago.

    Its shares rose nearly 70 percent in 2017. Datawatch fell 2.7 percent to close at $9.20 on Thursday.

    Reporting by Liana B. Baker in San Francisco; Editing by Richard Chang

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