QUICK TAKE:
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Capillary Technologies, India’s Bengaluru-based AI-native loyalty SaaS company that listed on the NSE and BSE in November 2025, has signed a definitive agreement to acquire SessionM Inc. — the customer loyalty and engagement platform owned by Mastercard since 2019 — in an all-cash deal worth $20 Mn (Rs 181.8 Cr). The acquisition, Capillary’s fifth since 2021, gives the Indian SaaS firm a direct foothold in the North American and Latin American enterprise loyalty market and pushes the combined entity’s annual recurring revenue to over $115 Mn, serving 150+ customers including 25 Fortune 500 companies across 47 countries.
The price makes this deal extraordinary in both directions. Capillary is buying a business that generated $50.5 Mn in CY2025 revenue for just $20 Mn — a 0.40x revenue multiple that would be considered fire-sale pricing in any SaaS transaction. The catch: SessionM’s revenue has declined for three consecutive years ($57 Mn → $54.5 Mn → $50.5 Mn). Mastercard is shedding a non-core asset. Capillary is betting it can re-ignite a decelerating platform using its AI-native loyalty stack, its existing enterprise relationships, and the distribution engine of the world’s second-largest card network it just bought from. The bet is asymmetric — but so is the risk.
StartupFeed Insight
| The non-obvious insight: Capillary is not buying SessionM’s revenue — it is buying SessionM’s customer contracts and 800 million consumer profiles. Enterprise loyalty contracts are typically 3–5 year deals with high switching costs. Even at SessionM’s declining revenue trajectory, Capillary inherits multi-year committed ARR from 40+ enterprise clients including names in food & beverage, consumer goods, and airlines — sectors where Capillary has limited current penetration. The $20 Mn cash outlay buys a client list that would cost Capillary 5–7 years of organic sales cycles to build natively in North America.
Why Mastercard is selling: • SessionM was acquired by Mastercard in 2019 as a data and loyalty capability play — Mastercard wanted consumer engagement data to complement its payment network. As Mastercard’s focus has shifted to payment infrastructure and B2B2C services, a standalone loyalty SaaS business generating sub-$55 Mn ARR is a distraction, not a strategic asset • The $20 Mn exit price represents a significant write-down from Mastercard’s 2019 acquisition — SessionM had raised ~$120 Mn in venture funding before being acquired, suggesting Mastercard paid a substantial premium in 2019 and is now taking a loss to exit cleanly The integration risk: • Capillary is simultaneously integrating Kognitiv (previous acquisition) AND SessionM — with combined customer integration expected to take 24–36 months. Two parallel integrations at a newly public company with a Q3 FY26 net profit decline of 22% (Rs 8 Cr vs Rs 10.3 Cr YoY) is a significant execution burden • SessionM’s revenue decline of 6% in CY2025 and cumulative -11.4% since CY2023 suggests client churn or downsell — Capillary must identify and arrest the root cause within 12 months of acquisition or inherit the declining trend permanently Profitability math: At $20 Mn purchase price and $50.5 Mn trailing revenue, Capillary needs to restore SessionM to even flat revenue to generate a 2.5-year payback period. Capillary’s track record across four previous acquisitions — consistent 4-year cash payback and 20%+ ROIC — gives some confidence. But those prior acquisitions (Persuade, Brierley, Digital Connect, Kognitiv) were all acquired when the targets were growing or stable. SessionM is the first declining-revenue acquisition in Capillary’s M&A history. Our prediction: Capillary will demonstrate SessionM revenue stabilisation by Q2 CY2027, driven by cross-selling its Loyalty+/Engage+ stack into SessionM’s North American client base. The combined $115 Mn+ ARR target will be achieved by CY2028. Share price will remain under pressure through integration period (Rs 480–540 range) before re-rating once combined ARR clarity emerges in CY2028 results. |
Deal Structure — Full Breakdown
| Component | Details |
| Deal Type | 100% stake acquisition — Capillary Pte. Ltd. (wholly owned overseas arm) acquires SessionM Inc. |
| Entities Acquired | SessionM Inc. (USA) + SessionM Czech subsidiary |
| Cash Consideration | $20 Mn (Rs 181.8 Cr) — base cash consideration | All-cash deal |
| Revenue Multiple | 0.40x CY2025 revenue ($20 Mn / $50.5 Mn) — deep value / distressed pricing |
| Team Transition | Specialised SessionM team joins Capillary to ensure continuity and preservation of expertise |
| Expected Close | Within 180 days of signing (Feb 24, 2026) — i.e., by ~August 2026 |
| Integration Timeline | 60 customers from Kognitiv + SessionM combined | Integration: 24–36 months | Complete: CY2028 | Stable: CY2029 |
| Regulatory Approvals | SEBI filing made (Reg 30 of SEBI LODR 2015) | US regulatory clearances required | No CCI concern expected |
| Acquisition Number | 5th acquisition by Capillary since 2021 (after Persuade, Brierley+Partners, Digital Connect, Kognitiv) |
Valuation Analysis — Is $20 Mn Fair?
| Metric | SessionM | Peer Benchmark | Assessment |
| Revenue (TTM) | $50.5 Mn (CY2025) | $30–150 Mn for loyalty SaaS M&A | Mid-range |
| Price / Revenue | 0.40x | 2.0–5.0x (healthy SaaS) | Deep discount |
| Revenue Trend | -11.4% over 3 yrs | Healthy: +10–20% YoY | Risk factor |
| Prior Funding (pre-Mastercard) | ~$120 Mn VC raised | — | ~83% discount to peak funding |
| Customer Profiles | 800 Mn consumer profiles | Capillary: 1.8 Bn profiles | Additive — 2.6 Bn combined |
| Enterprise Customers | 40+ clients, 35+ countries | — | Key strategic value |
| Capillary’s Track Record | 4 prior acquisitions: all with 4-year cash payback periods and 20%+ ROIC — consistent M&A execution | ||
Target Snapshot — SessionM
| Parameter | Details |
| Founded | 2011 — Boston, Massachusetts, USA |
| Acquired by Mastercard | 2019 |
| Core Product | Cloud-based loyalty and customer engagement platform — rewards, gamification, personalisation, analytics |
| Revenue CY2025 | $50.5 Mn (CY2025) | $54.5 Mn (CY2024) | $57 Mn (CY2023) — 3 years of decline |
| Customers | 40+ enterprise clients across 35+ countries — F&B, consumer goods, airlines, retail |
| Consumer Profiles | 800 Mn+ consumer profiles |
| Geographies | North America (primary), LATAM, Europe (Czech subsidiary) |
| Pre-acquisition Funding | ~$120 Mn raised across multiple VC rounds before Mastercard acquisition |
| Why Mastercard is Selling | Non-core asset divestiture — Mastercard refocusing on payment infrastructure; standalone loyalty SaaS not aligned with core B2B2C strategy |
What Capillary’s CEO Says
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The phrase “delivering on that promise to shareholders” is a direct reference to Capillary’s November 2025 IPO narrative, in which M&A was explicitly positioned as a post-listing growth driver. With SessionM announced just three months after its muted listing, Reddy is moving quickly to validate the inorganic growth thesis — even as the stock sits at Rs 512, below its Rs 577 issue price.
Acquirer Snapshot — Capillary Technologies
| Parameter | Details |
| Founded | 2008 — Bengaluru, Karnataka |
| Founder & CEO | Aneesh Reddy |
| Listed | November 2025 — NSE/BSE (CAPILLARY) | IPO price: Rs 577 | Listing price: Rs 560 (−2.9% discount) |
| Market Cap (Feb 24, 2026) | Rs 4,067 Cr (~$447 Mn) | Share price: Rs 512 (−11% from issue price) |
| Q3 FY26 Revenue | Rs 184 Cr (+16% YoY) |
| Q3 FY26 Net Profit | Rs 8 Cr (−22% YoY vs Rs 10.3 Cr) |
| Pre-acquisition ARR | ~$65–70 Mn (estimated pre-SessionM) |
| Post-acquisition ARR | $115 Mn+ combined (target) |
| Products | Loyalty+ (loyalty management), Engage+ (omnichannel engagement), predictive CDP |
| Key Clients | IndiGo, Domino’s Pizza, Pantaloons, Malabar Gold & Diamonds, 410 brands across 115 customers in 47 countries |
| Industry Recognition | Forrester Wave Leader — Loyalty Technology Solutions Q4 2025 (highest score in both Current Offering & Strategy) |
| M&A Track Record | 5 acquisitions: Persuade (2021), Rewards+, Brierley+Partners, Digital Connect, Kognitiv → SessionM (2026) | Avg: 4-year payback, 20%+ ROIC |
SessionM’s Revenue Trend — The Problem Capillary Is Buying
| Year | Revenue | YoY Change | Context |
| CY2023 | $57.0 Mn | Baseline | Mastercard ownership, steady state |
| CY2024 | $54.5 Mn | −4.4% | First visible decline |
| CY2025 | $50.5 Mn | −7.3% | Decline accelerating |
| 3-Year Cumulative | — | −11.4% | Acquisition price: $20 Mn |
The accelerating decline — from -4.4% in CY2024 to -7.3% in CY2025 — is the central risk in this deal. It suggests the revenue erosion is not stabilising but worsening, possibly driven by client churn as SessionM’s roadmap stagnated under Mastercard’s ownership. Capillary will need to demonstrate a credible product investment thesis for SessionM’s North American clients within the first 6 months post-close to arrest the churn curve.
Why This Deal Reshapes the Loyalty SaaS Landscape
The global loyalty management platform market is growing at 15%+ CAGR, driven by enterprise brands doubling down on first-party data strategies in a post-cookie world. Capillary with $115 Mn+ ARR post-SessionM becomes one of the largest pure-play enterprise loyalty SaaS players globally — behind only Salesforce Marketing Cloud and Comarch in terms of specialised loyalty deployments, but ahead on AI-native capabilities as acknowledged by Forrester.
| Player | Positioning | What Capillary Gains |
| Salesforce Marketing Cloud | Dominant suite player — loyalty is one feature among many | Differentiation: Capillary is purpose-built loyalty, not bundled |
| Comarch Loyalty | Strong in Europe / retail — limited North American presence | SessionM’s NA client base fills the gap Comarch can’t address |
| Loyalty Ventures / Cardfree | F&B and QSR focus — fragmented, subscale | SessionM’s QSR/F&B clients complement Capillary’s IndiGo/travel base |
| Mastercard Offers / Paze | Payment-linked loyalty — not enterprise SaaS | Mastercard exits loyalty SaaS — validates Capillary’s standalone play |
What’s Next
The 180-day close window means Capillary will integrate SessionM’s specialised team into its operations by mid-August 2026 at the latest. The immediate priority will be account management — retaining SessionM’s 40+ enterprise clients while Capillary maps its Loyalty+/Engage+ stack onto their existing deployments. Any client churn in the first 12 months of Capillary ownership will be visible in quarterly results and will be interpreted by investors as integration failure.
The financial milestone to watch: SessionM revenue stabilisation at $50+ Mn in CY2026. If Capillary can arrest the decline and hold flat — even without growth — the acquisition returns to a 2.5-year payback period and validates the $20 Mn price. If CY2026 revenue falls below $47 Mn, the multiple expansion logic breaks down and integration costs will have diluted Capillary’s margin profile visibly.
The bigger picture: Capillary’s SessionM acquisition is the clearest signal yet that India’s B2B SaaS companies are entering a second stage of globalisation — not through organic sales expansion but through acqui-expansion: buying underperforming Western businesses at distressed multiples, applying Indian engineering cost efficiency and AI capabilities, and rebuilding them. If Capillary succeeds, it becomes the template for every Indian enterprise SaaS company looking to bypass 10 years of US market-entry friction.
