By Julie Bort
Network World, 04/29/02

Growth is divine Peregrine scratches the management itch The fastest growing companies The fastest growing large companies View other lists NW200 main story

In a year when more than 40% of the Network World 200 saw revenue shrink, tripling — or even doubling — revenue is downright amazing. That's the case for this year's two fastest-growing companies.

Collaboration software maker Divine grew fastest overall, stretching revenue 353%. Peregrine Systems grew fastest among those with more than $500 million in revenue with a 123% climb.

Growth is divine

Divine, No. 122 for its entrée in the NW200, grew revenue from $44 million in fiscal 2000 to $199 million in 2001 by making its "extended enterprise" wares available at the right time and place, says Flip Filipowski, founder and CEO of Divine.

Divine is best known for the enterprise-hardened instant messaging product, MindAlign, which doubles as a persistent message board. But the company offers Web conferencing, content management, campaign management and telephony products along with system integration and application service provider services — all to help companies support applications that they are speedily constructing for customers and suppliers. The events of Sept. 11 also motivated companies to do more collaboration and less travel.

"All of those things converged on us like a perfect storm," Filipowski says.

It also didn't hurt that Divine was flush with cash at a time when competitive start-ups were running dry. Filipowski, well-known as the founder of Platinum Technology, is also an angel investor and venture capitalist. Several of Divine's other executives also came from Platinum, acquired by Computer Associates in 1999 for $3.5 billion.

The young Divine, founded in 1999, already has its own venture investment division, Divine InterVentures. Such access to cash let it be a buyer during a buyer's market: It has acquired 32 companies since its inception, 16 of which it had incubated. The 16 external acquisitions, including former NW200er OpenMarket, occurred after March 2001.

Such a spree explains why Divine is still in the red, losing $370 million in 2001. But it expects to be profitable by the fourth quarter "and thereafter," Filipowski says.

Peregrine scratches the management itch

Peregrine also grew by scratching just when the enterprise felt the itch — in this case, for better network infrastructure asset management.

Peregrine grew revenue by 123% to hit $564 million in fiscal 2001 from $253 million in fiscal 2000. That growth resulted in a whopping 36-spot jump on the NW200, to No. 83 this year, from No. 119 last.

In all fairness, this performance was helped by a funky fiscal year. Ending in March, growth occurred mainly in the 2000 calendar year, before the nation was firmly in recession. But timing wasn't the only reason. Growth was fed by two other factors, cool technology and tight integration, says CEO Steve Gardner.

Cool technology, such as the agent-free network discovery technology gained from Loran Network Holding in September 2000, "improved market penetration," he says. Tight integration of discovery, monitoring and asset management gave Peregrine a network management suite. Gardner likens it to what SAP did a decade ago by combining resource planning, general ledger and marketing applications to manage the entire manufacturing cycle. "We're doing the very same thing, but we're doing it for corporate infrastructure," he says.

One hurdle to future growth is that Peregrine traditionally sells to large multinational firms. They have the budgets and expertise to handle its a la carte modules. But those customers have long sales cycles and have forced reliance on a few big customers. Peregrine has begun pursuit of the middle market with Xanadu, an appliance that can cost less than the module approach and can be operational in 36 hours, Gardner says.

Success in new markets is imperative for Peregrine, because great revenue hasn't meant big profits. It lost $852 million and hasn't hit a year-end profit since 1997. The loss is largely thanks to Peregrine's acquisition spree — six companies in fiscal 2001 and three more since. But Gardner says fiscal 2003 will bring the pay off, in profit.

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