Welcome to the $100 million ARR club, BounceX.
This morning (evening, timezone depending), BounceX, a New York-based marketing technology startup, announced that it has reached the $100 million annual recurring revenue (ARR) threshold, adding its name to our running list of companies that have crossed over into nine-figure revenue while remaining private.
BounceX also announced a name change to Wunderkind, a move that its CEO Ryan Urban told TechCrunch signaled “a new chapter” for the firm. Summarizing the executive’s comments: After seven years in business and quite a lot of work building out its product line and revenue base, BounceX wants to think of itself as something more than merely another SaaS company; the name Wunderkind, in his view, demands that what they create “has to be extraordinary,” fitting into the idea.
Normally we’d gently tease such plainly stated aspirations, but with $100 million in ARR and a history of efficient growth behind the goal, we won’t. Instead, let’s talk about what the company does, and how it has grown to the size that it has.
What’s a BounceX?
I’ll spare you the details and explain what the company does without buzzwords, as best I can.
It starts with Web traffic. Everyone has it. But often you, an online retailer, don’t know who is coming to your website. BounceX (Wunderkind) can help you figure that out, matching anonymous web traffic to email addresses. Now you know some of the folks coming to your site, and how to reach them. Next, Wunderkind can help you send those identified folks targeted emails that match what is known about that person, or email address. The result of all this work is material revenue scale — the company claims that its technology boosts “behaviorally triggered emails to over 9%, on average, of a retailer’s digital revenue.”
For those doing the math at home, 9% is a lot.
All this works out for Wunderkind as well, with its ability to help companies drive revenue assisting it in landing deals. The company closes new customers pretty efficiently, with Urban telling TechCrunch that his company’s CAC-to-LTV ratio is “is probably the highest in [its] industry,” and has “been going up over time.”
How does it do that? By the company having what it called “really high [deal] close rates.” Fine, but how does the tech drive the company’s close rate? By promising results and cutting itself off if it fails.
Wunderkind runs short-term pilots with potential customers, say four months long. The company will only move to a more traditional SaaS contract if it sufficiently drives revenue for the potential customer. According to Urban, “90 to 95% of the time” his company “deliver[s] the guaranteed revenue.”
And the customer converts, voila!
This method of snagging customers led to Wunderkind having some pretty stellar SaaS metrics. Picking one from TechCrunch’s call with the CEO, “a lot of [Wunderkind sales] reps have north of $3 million quotas a year and they hit,” he said, meaning that they meet that high expectation.
So what?
You can probably see where this is going: What happens when a company has a very strong customer value to customer acquisition cost structure, and a very efficient sales team? It doesn’t burn a lot of capital. Unsurprisingly, Wunderkind has been super efficient to date, with Urban telling TechCrunch that “the amount of equity [his company has] actually put to work is probably sub-$35 million,” with less than $50 million in equity capital raised. The company also has debt lines that it can use, the CEO noted.
Getting from $0 in ARR to $100 million while spending around $35 million in equity-sourced funds is pretty bonkers, but perhaps even more nuts is the fact that, per the CEO, Wunderkind got through its first four years on $1.5 million in external money. Urban chalked the low-burn results to the founding team and early employees having experience working with one another, and building features “purely focused on improving experience [and] driving revenue.”
That’s enough for now, we’ll write about the company more when it reaches its next ARR threshold, executes a secondary transaction to put off an IPO, or files. The lesson from today is that it’s possible to build a SaaS company to-scale with far less revenue than I thought possible. Anyhoo, Wunderkind joins the $100 million ARR cadre with what I think is the second-best result in terms of efficient growth. Only boostrapped Cloudinary has cleaner metrics, though with a smaller ARR total for now.
For more on the $100 million ARR club, you can check out this and this to read about other companies that have been inducted this year.
from TechCrunch https://ift.tt/391lbdq
No comments:
Post a Comment