Zenefits Financials Reveal It Is One Of The Fastest-Growing SaaS Businesses Ever

We all knew that cloud HR startup Zenefits is growing fast, but how fast exactly? At the 33rd Annual JPMorganChase Health Care Conference today, Zenefits CEO Parker Conrad plans to share some of the company’s financials, which will put its growth numbers into perspective.

In a presentation this afternoon, Conrad will reveal that at the close of its fiscal year this month, Zenefits will surpass $20 million in annually recurring revenue after less than two years in business. That’s up from $1 million at the same time last year, which means the company grew 20x over the last 12 months.

Based on its current growth trajectory, Zenefits expects annually recurring revenue to grow to $100 million over the next year. That might not seem like a lot, especially given the amount of money it’s raised since being founded (about $85 million) and its most recent valuation ($500 million).

But let’s put the company’s growth trajectory into context: It took SaaS businesses like Workday and Salesforce about four years to reach $20 million in annual recurring revenue; and it took each of them about five or six years to hit $100 million.

The most interesting thing about those numbers is that, unlike some other enterprise SaaS companies, Zenefits doesn’t charge for use of its cloud-based HR platform. It’s only if customers choose to designate it as their insurance broker that Zenefits makes any money. Even then, it receives a commission from the insurance provider, so customers continue to enjoy use of its platform for free.

All of this points to why private investors have been clamoring to invest in Zenefits, and why it has such aggressive plans to expand. It also might help explain why Yammer founder David Sacks came out of retirement to join Zenefits as COO despite already being a bazillionaire.

Zenefits started off 2014 by raising a pretty modest $15 million funding round from Andreessen Horowitz, but quickly added to its coffers. Six months later, it went back and got another $66.5 million from a16z and Institutional Venture Partners.

Based on its growth projections, the company has also been hiring aggressively. In 2014, the company went from 15 to more than 500 employees. Headcount is set to balloon even further, as Zenefits recently opened a 100,000-square foot office in Scottsdale, Ariz., where it expects to hire 1,300 employees over the next three years.

While Zenefits’ revenue numbers are impressive, especially for a company that is just two years old, it’s worth pointing out that not all revenue is created equal. It isn’t clear how expensive its revenue is to generate, especially considering the massive increase in the company’s headcount recently.

Other fast-growing SaaS businesses, like Box for example, eventually reported revenue that cost far more to generate than some expected. The result of that was a delayed public offering at a lower per-share price than was first assumed.

The market could be given some indication of how quickly the firm is spending cash to grow its recurring revenue by the timing and size of its next financing round.