When people think of consumer VoIP services, the first name to come to mind for many is Skype . But while Microsoft’s recent acquisition begins to explore a new role as a social advertising network, a competing VoIP provider, Rebtel, is hoping to gain some new ground. The Stockholm-based company, which has been in operation since 2006, today is announcing that it has passed 20 million active users, with 2012 revenues of $80 million and projected turnover of $100 million for 2013.
It has also seen a 250% increase in app downloads and paying users since 2011, with overall users growing currently at a rate of 500,000 each month.
The business of over-the-top telephony services is a hot space right now, with companies like Whatsapp nabbing business away from carriers by becoming users’ default mobile messaging service. As of August 2012 Whatsapp was delivering 10 billion messages per day. And as we’ve said in the past, we’ve heard that its been an acquisition target for Facebook.
Rebtel very much fits into that mold by offering a more cost-effective way of making calls on mobile devices, with a particular emphasis on long-distance calls that can cost a fortune otherwise if made via a mobile network. “Our average users are consumers with a lot of first- and second-generation immigrants among them,” Bernström notes, so many of them will want to be calling family abroad.
And while we don’t know whether Skype is profitable today (it wasn’t when Microsoft bought it), Rebtel’s CEO Andreas Bernström tells me that his company is, and has been for the past two years. That’s one reason why Rebtel has yet to raise more money since picking up a Series A round of $20 million from Index Ventures and Benchmark the year it was founded. “We have $10 million in the bank today,” he tells me. Still, scale is nothing to be sniffed at: Skype currently has some 280 million monthly active users, and yesterday another competitor, Viber, yesterday announced 140 million users; its service is completely free.
That strategy may change in the future, as Rebtel gears up for further expansion. Earlier this month, it announced a new line of business as a white-label VoIP provider, releasing an SDK so that developers can incorporate Rebtel’s VoIP service into their apps.
Rebtel is primarily targeting mobile developers with the service, because that is where Rebtel itself focuses most of its business, with apps for iOS, Android and Windows Phone (in addition to PCs). As a point of comparison, although Skype makes a big point of how popular its mobile apps are, Bernström says that about 90% of Skype calls are made from its desktop clients.
Similar to the services offered by Twilio, the idea with the SDK is a light VoIP client that can sit embedded in other services, without the need to download a separate application for it to work.
Unlike Twilio, Rebtel is using a freemium business model for this service to attract users. While still in beta, all of it will be offered for free “with no restrictions on it because we want to understand how the market will accept and work with the SDK,” he says. He notes that since Rebtel announced two partners — VIVfone, a mobile CRM app still in stealth mode; and app developer house MobisleApps, for it to incorporate it into that apps that it makes — it’s had “a number of calls from sizeable companies to test and use this.”
Ultimately, Rebtel will make money by offering SLAs and other services to larger companies that want to incorporate the SDK; and it will also introduce a licensing fee for particularly heavy usage.
There is also a third revenue stream that is more about pushing its direct-to-consumer service: when you press an icon to initiate a call, you get a “powered by Rebtel” notice.
For each person that clicks that to download the native Rebtel client, “We are willing to pay developers for that referral traffic,” he says, because Rebtel has figured out that it is relatively successful in generating revenue from users who download its apps. “We have a 5% conversion from downloads to paying customers, each of who pay $23 dollars per month. We typically have a 35% margin on that. That means we can work out what the value of one app download is.”