varolii-66You’ve probably received the call or text from an airline, sports team or bank — an automated message informing you that your flight has been canceled; game time has changed or bank statement is overdue.

Now, Nuance — the giant speech recognition company — is buying a Seattle-based company that specializes in those automated alerts. In a deal of undisclosed size, Nuance announced Thursday morning that it is buying Varolii, a 13-year-old company that originally started as Alertline before changing its name to Par 3 Communications and then Varolii.

Varolii was big enough at one point to file for an initial public offering in 2008, at the time employing 288 people. But it never made it onto the public exchanges, citing difficult market conditions amid the economic recession. In 2007, Varolii posted revenues of $68 million, and a net loss of $4.5 million. The company was backed by Draper Fisher Jurvetson, BlueRun Ventures, Institutional Venture Partners and InterWest Partners.

David McCann
David McCann

More recent financial information was not available the privately-held company, which in recent years had been led by former Microsoft general manager David McCann.

Varolii has more than 400 customers, including Alaska Airlines, Southern California Edison, SunTrust, and Time Warner Cable. The deal is expected to close next week.

Naunce already has a large operation in the Seattle area, in part through its acquisition in 2011 of Swype. The company’s offices are located on 1st Avenue, just a few blocks away from Varolii, which sublet a large chunk of space to the startup co-working space SURF Incubator last year.

We’ve asked Nuance for more details about the acquisition, and how many employees from Varolii will be joining the company. We will update this post as we hear more.

UPDATE: Varolii employs about 200 people, including 140 in the Seattle area, with most of the others in Burlington, Mass. Nuance employs 12,000 worldwide, including more than 200 in Seattle. Nuance plans to keep the Varolii team at its offices on 2nd Avenue.

“Pending the close of this acquisition — which we expect next week — our plan is to retain Varolii as the development and product center for Nuance Outbound, leveraging the Varolii team, especially in development, hosting, sales and marketing,” said a Nuance spokesperson. “As we are very early in the integration process, we can’t comment further.”

Current revenues for Varolii, which raised about $50 million over the years, were not disclosed.

Here’s the full press release:

Nuance to Acquire Varolii, Extend Leadership in Cloud-Based Customer Service Solutions

Proven by More Than 400 Enterprises, Varolii’s Outbound Cloud Platform Strengthens and Accelerates Nuance’s Multichannel Strategy

Burlington, MASS. – October 10, 2013 – Nuance Communications (NASDAQ: NUAN) today announced that it has signed an agreement to acquire Varolii, the leading provider of cloud-based outbound customer engagement solutions. The Varolii platform is used by many of the world’s largest companies to manage outbound customer service communications via automated phone, email and text messages, reaching an estimated one out of every five American adults each year. The combination of Varolii and Nuance will create a comprehensive cloud-based solution that brings together the best of inbound and outbound customer service, resulting in a complete, scalable, secure and cost-effective platform.

Nuance’s customer service solutions support many of today’s largest brands, including AT&T, Barclay’s Wealth & Investment Management, FedEx, Geico, Telstra, T-Mobile, USAA and others. Nuance’s solutions are available across voice, mobile and Web channels, allowing consumers to engage how, when and where they want, conveniently and effectively. Today, Nuance’s customer service solutions process more than 12 billion customer interactions each year across more than 6,500 organizations including 75% of the Fortune 100.

The combination of Nuance’s world-class customer service solutions and Varolii’s Customer Engagement Cloud will accelerate Nuance’s strategy to transform the customer service experience through conversations that are engaging, personalized and proactive. Varolii will bring a full outbound communication portfolio to the Nuance OnDemand Customer Service Cloud, which provides inbound hosted IVR (interactive voice response) and Nina virtual assistant solutions for mobile and Web applications. Varolii also will extend Nuance’s market leadership in cloud-based customer service through the addition of over 400 deployments with enterprise organizations, many of which have implemented complementary solutions from Nuance, including Alaska Airlines, Southern California Edison, SunTrust, and Time Warner Cable.

This acquisition will strengthen and broaden Nuance’s participation in the growing customer service solutions market. According to Forrester Research, 57% of U.S. consumers had unsatisfactory service interactions in the past 12 months and 80% of customer service decision-makers say that improving their customer experience is one of their top two customer service goals. Forrester buyer surveys indicate that 25% of enterprises are considering proactive outbound as a key contact center investment in the next year and that proactive outbound will enjoy excellent growth rates as more and more enterprises adopt it.

“The greatest opportunity to deliver superior service is when you can anticipate a need and proactively contact the customer in a personalized and intelligent way,” said Robert Weideman, Executive Vice President and General Manager, Nuance Enterprise Division. “The combination of Nuance and Varolii not only represents the best of inbound customer service with the best in outbound customer communications, but the opportunity to deliver automated yet natural conversations with customers that are more compelling and effective.”

“Varolii has been trusted as a leading provider of repeatable customer engagement applications across six B2C-intensive markets, enabling leading companies to reduce costs, increase customer reach and improve customer outcomes,” said David McCann, President and Chief Executive Officer of Varolii. “We’re excited to become a part of Nuance’s comprehensive multi-channel vision.”

The transaction has been approved by both companies’ Boards of Directors and is expected to close next week.

About Nuance Communications, Inc

Nuance Communications, Inc. is a leading provider of voice and language solutions for businesses and consumers around the world. Its technologies, applications and services make the user experience more compelling by transforming the way people interact with devices and systems. Every day, millions of users and thousands of businesses experience Nuance’s proven applications. For more information, please visit www.nuance.com.

Comments

  • Kevin Foreman

    Congrats on the exit. I know there was a boatload of hard work that went into all the ups and downs of Varolii.

  • Varolii_worker

    As with most acquisitions, you can be certain that the executives got their “Golden parachutes”, while many rank-and-file workers won’t get anything but a pink slip. Such is high-tech corporate America………

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