Welcome back to our $100 million annual recurring revenue (ARR) series, in which we take irregular looks at companies that have reached material scale while still private. The goal of our project is simple: uncovering companies of real worth beyond how they are valued by private investors.
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It’s all well and good to get a $1 billion valuation, call yourself a unicorn and march around like you invented the internet. But reaching material revenue scale means that, unlike some highly valued companies, you’re actually hard to kill. (And more valuable, and more likely to go public, we reckon.)
Before we dive into today’s new companies, keep in mind that we’ve expanded the type of company that can make it into the $100M ARR club to include companies that reach a $100 million annual run rate pace. Why? Because we don’t only want to collect SaaS companies, and if we could go back in time we’d probably draw a different box around the companies we are tracking.
$100M ARR or bust
If you need to catch up, you can find the two most recent entries in the series here and here. For everyone who’s current, today we are adding Snow Software, A Cloud Guru, Zeta Global and Upgrade to the club. Let’s go!
Snow Software
Just this week, Snow Software announced that it has crossed the $100 million ARR mark, according to a release shared with TechCrunch. The Swedish software asset management company has raised a few private rounds, including a $120 million private equity round in 2017. But, unlike many American companies that make this list, we don’t have a historical record of needing extensive private capital to scale.
At the time of its 2017 private equity round, the company claimed revenue growth of “50% annually since 2012.” The company’s expansion appears to have have since slowed, with the company stating in its new release that it “started the year with 40% year-over-year growth in total ACV bookings driven by 115% growth in subscription ACV bookings.”
We’d prefer hard revenue revenue metrics, even if many SaaS companies prefer talking about bookings numbers than GAAP top line. Regardless, Snow is now a 75% recurring-revenue business, it said, and could generate adjusted profit (“positive EBITDA,” in its wording) this year. Very good!
Snow is therefore a SaaS success, a SaaS transition success and an IPO candidate. All we ask is that when it does file to go public, it targets the U.S. markets so that we get a full S-1.
A Cloud Guru
One of my favorites from this list is A Cloud Guru, another international-ish success (based in Austin with strong roots in Australia) making it onto the $100 million ARR club roll. I dig it because it’s an education company that runs like a SaaS business and is helping a lot of folks stay current in a changing industry. Hard to hate on that!
The company focuses on training people to better understand cloud tech. As many firms move to Azure, AWS, GCP and other solutions, learning how to interface with those technologies is a constant struggle. A Cloud Guru took training from the past (old-fashioned IT training came in lumps and became quickly outdated as tech moved ever faster) and brought it into the SaaS realm (constant updates, smaller modules, designed to fit into workers’ lives).
The market liked what A Cloud Guru had on offer, something that accelerated in 2020 as the digital transformation reached warp speed.
TechCrunch caught up with its CEO Sam Kroonenburg to chat about how his company has recently exploded, with the executive sharing that A Cloud Guru has had a pretty incredible year, tripling revenue in about six months and shooting toward $100 million ARR. According to a release from the company, the final numbers as of July 1, 2020 were as follows: On a year-over-year basis the company’s user count grew by 157%, its ARR rose by 362% and its headcount rose 253%. (A Cloud Guru did buy a smaller firm toward the end of 2019, for the record.)
The company is currently at $80 million ARR, but given its current pace of growth, it will be at $100 million soon enough, so it’s welcome into the club.
Zeta Global
You might recall Zeta Global from its 2017 Series F, when the New York-based company raised $140 million at a valuation of around $1.3 billion. TechCrunch covered the round at the time, noting that the financing event was “a bit unusual in that it consist[ed] of $115 million in equity capital and $25 million in debt financing.”
No matter, the marketing technology company is huge. According to a spokesperson, it grew 20% in 2019 and expects double-digit growth in 2020. Those growth rates allowed Zeta to generate more than $400 million in revenue in 2019 and ARR of “substantially more” than $100 million, according to the same spokesperson.
Even better, the company told TechCrunch that it is profitable and has improving gross margins. We’d like to see this company go public so we can get a better look at its numbers.
Notably, Zeta has a history of buying other companies. Back in 2015 TechCrunch covered its purchase of eBay’s CRM business. So, Zeta has been a company of scale for some time. It’s also a bit famous for being co-founded by former Apple and Pepsi CEO John Sculley.
Upgrade
TechCrunch covered Upgrade last month when the credit-focused company announced a $40 million fundraise. At the same time the firm detailed that it had reached a $100 million revenue run rate. Welcome to the $100 million club, Upgrade.
Upgrade is doing neobanking in reverse, starting with consumer loans and credit cards with a planned expansion into checking accounts and debit cards. Other firms have started with more traditional banking tooling before expanding toward credit. Upgrade’s planned move into more vanilla banking services is why it raised additional capital; with extra cash it can run cash flow-negative for a while and not get into trouble. Cash is business oxygen, yes, but it’s also business flexibility.
The company’s product decisions have resulted in big growth for Upgrade and positive cash generation. We wonder how many other neobanks can tout that same metric. Upgrade expects revenue of $160 million in 2020; let’s see if it can get there. (Upgrade had $60 million in revenue in 2019, so it’s a high hurdle.)
And that’s what we have today. Of course, contact alex.wilhelm@techcrunch.com if your private company is big and growing and wants to talk hard numbers. Happy Fourth in the meantime!