Hello and welcome back to our regular morning look at private companies, public markets and the gray space in between.
Today we’re adding four new names to the growing $100 million annual recurring revenue (ARR) club. The firms — Sisense, SiteMinder, Monday.com, and Lemonade — add diversity to our current group of yet-private companies which have reached the nine-figure recurring revenue threshold.
Our goal in tracking the companies in this high-flying cohort is to keep tabs on the private firms (often unicorns, it should be said) that could go public if needed. While not every unicorn will or could go public, companies with nine-figure ARR have a clear path to the public markets provided that their economics are in reasonable shape.
And we’ve seen some remarkably efficient companies meet the mark, including Egnyte with just $137.5 million raised, and Braze, with only $175 million on its books. For growth-oriented, venture-backed companies, those are efficient results.
But let’s add a few more members to the club today. Please meet our new centurions, centaurs, or whatever we end up calling them.
Sisense: more than $100 million ARR
Sisense is a business intelligence company that merged with Periscope Data earlier this year. The combined firm has raised just over $200 million, according to Crunchbase, with the lion’s share of that landing in Sisense’s column (about $175 million).
What’s notable about the combination is that the two firms were public about saying that, when brought together, they would have combined ARR of $100 million. That was back in May. Today, Sisense has crested the $100 million mark by itself, according to an interview with TechCrunch. With Periscope added to the mix the company’s total ARR is naturally higher.
Sisense had a few original goals according to CEO Amir Orad, including helping businesses “take complex data and bring it together to get insights.” Its second focus is helping companies “take complex data sets and build [them out] as an analytical application in their products,” he said.
Periscope came into the picture when Orad and the smaller company’s CEO Harry Glaser (now Sisense’s CMO) started talking as friends about their respective markets. According to Orad, Glaser outlined a new sort of organization being built inside some companies that “were not traditional BI teams” or “traditional product teams,” but instead brought together “data engineers and data scientists and very capable individuals who [wanted] to make sense of [the] data sitting in the cloud.” Periscope had built “a very impressive business” supporting those new organizations, with “many hundreds of customers,” Orad said.
That meant that Sisense’s pair of focuses were somewhat two of out three, making the corporate combination an obvious bet.
Regarding what changed as Sisense grew, cresting the $50 million ARR mark and later the $100 million ARR mark, Orad told TechCrunch that what differed was “scale,” saying that at its size “what you do impacts more people, more individuals, more companies, [and] more customers.” (I have interesting notes on how the two companies managed their combination from a culture perspective, let me know if you’d like to read them.)
SiteMinder: AU$100 million ARR
The first Australian member of the nine-figure ARR club is SiteMinder, which we’re letting in on a technicality; the firm’s ARR figure is in Australian dollars, which works out to around $70 million USD. However, its growth curve appears steep so we’re not too worried about including it a little early from a domestic dollar perspective.
SiteMinder, a software company that helps hotels attract and book more guests, is an attractive addition to our roster as it has raised little (just $35.1 million, according to Crunchbase data) across known Series A and B rounds. Given the scale of the global hospitality industry, the company’s TAM should give it plenty of room to grow.
SiteMinder announced AU$100 million in cumulative revenue earlier this year and confirmed AU$100 million ARR with TechCrunch in December. That means it had a pretty big second half of 2019. SiteMinder is backed by TCV and Bailador.
Monday.com: $100M ARR in a hurry
Monday.com is also a member of the $100 million ARR club, joining while growing inside a competitive market. I’ve covered Monday.com before, most recently when it raised $150 million at a nearly $2 billion valuation in mid-2019. The company sells team-oriented productivity software aimed at businesses looking to help employees keep better tabs on what their colleagues are working on. Companies like Monday.com, Slack and others are effective bets on workers needing new tooling to run quickly in the modern (and often remote) work-oriented business sphere.
The company declined to tell TechCrunch on the record when it reached $100 million ARR, instead offering the time frame on background, which we declined.
Monday.com is presumably growing very quickly. Its valuation multiplied from its Series C ($550 million) to its Series D ($1.95 billion), rounds that came just one year apart. That valuation interval indicates strong investor demand to put more capital into the company, usually the result of attractive growth. Notably at $100 million ARR and $1.95 billion in value, Monday.com was valued at around the same revenue multiple that Slack enjoys as a public company. (Monday.com may be Israel’s most valuable startup.)
Lemonade: $100M ARR and growing
Lemonade is a bit of an outlier case, but worth discussing. The firm reached the $100 million ARR mark in late 2019, but if it should be counted on our list at all is an interesting question. As we’re discussing ARR marks, software companies are the obvious firms for inclusion. That said, other forms of revenue does have a SaaS-like component.
Insurance is one such product. And, Lemonade, which sells home and rental insurance wants you to know that it is both growing very quickly and has its economics in order. In a post describing its rapid revenue ascent — including that it reached $104.4 million ARR in mid-November of 2019 — the firm detailed its improving cost of revenue profile:
For every dollar we earned in Q1 2017, we paid out $3.68 in claims. The ratio of dollars paid out to dollars earned is called a ‘Loss Ratio’, and at 368% it was called a Friggin Terrible Loss Ratio. Since then, it’s dropped steadily and steeply, and our 2019 third quarter Loss Ratio was 78%, and trending downwards. Notably, the equivalent loss ratio among the top 20 insurers in the US averaged 82.34% last year (source: S&P Global).
That puts the firm’s gross margins somewhere in the mid-20s. Not software-level to be clear, but attached to the sort of growth that Lemonade has posted, it’s still a company that is building material gross profit. And at some level that’s what we’re really scouting up by hunting for $100 million ARR businesses.
We’ve since conducted a short Q&A with Lemonade CEO Daniel Schrieber that we’ll publish after we get on the phone with MetroMile, another venture-backed insurance startup next week.
And that’s that. The $100 million club now includes a goodly number of companies, each of which is fascinating for its own reasons. Let’s see if any manage to exit this year. At least if they do, we’ll already have a good handle on what they are.