Meta Plans to Offload Kustomer After Acquiring It for $1BN Last Year

A sale is likely to result in a significant loss for Meta. Yet, it may spin the CRM business into an IPO

Meta Plans to Offload Kustomer After Acquiring It for $1BN Last Year
CRMLatest News

Published: March 13, 2023

Charlie Mitchell

Meta is seeking to sell Kustomer, the CRM vendor it acquired for a reported $1BN in February 2022.

While Meta initiated the deal in 2020, it took over a year to pass through regulatory scrutiny.

At the time, many considered the move a significant enabler in bringing WhatsApp and Messenger to customer service environments.

However, Meta has since announced integrations with a whole host of rival CRM vendors – most recently Hubspot – leaving some to question the deal’s value proposition.

On top of this, reports suggest that Kustomer’s revenue growth curve flattened last year – despite the high-profile acquisition – with one suggesting the vendor burned through $200MN.

Such expenditure includes operational and one-time expenses.

As quoted by The Wall Street Journal, a Meta spokesperson stated:

In light of Meta’s efficiency efforts, we’ve made the decision to focus on our fastest-growing business messaging offerings, including the monetization opportunity for WhatsApp.

The opportunity is likely to include adding features to WhatsApp that allow consumers to search for, message, and buy from businesses natively on the platform.

Indeed, Meta has already released such capabilities in Brazil.

A CRM solution could help businesses support these new commerce journeys and store customer experience data from them.

Yet, the solution does not have to be a first-party CRM. Meta could work with other leaders in the space to bring this vision to life.

Recognizing this, Meta seems content to work with third parties and shift back to its core business.

Perhaps this is no surprise after 2022 proved to be a year where its side projects, most notably in the metaverse, failed to capture the imagination of business leaders.

Indeed, it shut down Crayta and Echo VR, two of its metaverse services, earlier this month.

Nevertheless, this move is the biggest indicator yet that Meta is slimming down its portfolio, thanks to Kustomer’s $1BN price tag.

Moreover, it will come as quite the body blow to those at the top of Meta. After all, a sale will likely recoup only a fraction of what it paid for the CRM player.

Although, Meta may not give up entirely on Kustomer. Instead, it may spin it off into an IPO, let the reigns go, and see if it can revive its fortunes autonomously.

While Kustomer may have endured a tough year in 2022, most vendors across the CX space also dealt with a plateauing growth curve – including the likes of Salesforce.

Ultimately, however, the long wait for the deal to pass through the mitts of anti-competition regulators likely scuppered its momentum.

Meanwhile, the goals of Kustomer are unlikely to change. Brad Birnbaum, CEO and Co-Founder of Kustomer, articulated these in a blog post last year. He stated:

As we combine our award-winning technology with the resources of Meta, we will give brands throughout the world greater customer visibility, intelligent automation, and the tools to quickly adapt to issues and opportunities.

Expect this objective to stay the same, yet Kustomer will have to do so without Meta’s wallet making considerable contributions.




Brands mentioned in this article.


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