So you have a 380x revenue multiple — now what?

At this point, covering the one-click checkout space feels like an exercise in horse-kicking, but we’d be remiss to skip our usual math on the Bolt situation.

Bolt is one of the better-known one-click players in a cohort of startups that offers software to e-commerce retailers that is similar to Amazon’s “buy now” feature. Our own Mary Ann Azevedo dug into the space in May after erstwhile competitor Fast imploded.

The Fast story has become a cautionary tale. The still-alive Bolt, meanwhile, is digesting a fundraising binge, a customer lawsuit, an outspoken CEO who transitioned to board chairman, a huge historical burn rate and a revenue base that appears incredibly modest when contrasted with its most recent private valuation. The issues facing the company are not unique; a host of unicorns are dealing with imbalanced revenue, burn and valuation numbers in 2022.

But with Bolt, we may have something of an extreme case. The Information reported on the company’s financial situation last week, giving us a peek into how the most richly valued startups in the market today are resetting their targets and spending in a more conservative market.

Earlier today, TechCrunch dug into the unicorn glut, the effect of many late-stage startups suffering from recent fundraises that pushed their valuation to impractical levels when compared to current pricing. We also discussed the years that it will take some companies to grow into their most recent valuations. The Bolt saga is one of those stories.

Bolt’s results versus Bolt’s valuation

Pulling from TechCrunch coverage of Bolt’s fundraising history and its layoffs, as well as The Information’s piece discussing the company’s financial results, the following:

  • Bolt last raised a $355 million Series F, valuing it at around $11 billion in January 2022.
  • Bolt had “more than 550 employees working remotely across over 200 cities” at the time of that fundraise.
  • Bolt cut “at least 100 employees and counting across go-to-market, sales and recruiting roles” in late May.
  • Bolt recorded revenues of $30 million in 2021, $7.2 million in Q1 2022 and expects $44 million in top line this year.
  • Bolt expected to burn around $250 million this year, against around $500 million worth of cash on hand.
  • In addition to cutting $200 million worth of burn, the company slashed its target customer GMV result to $8 billion from $20 billion.

We can calculate three different revenue multiples for Bolt:

  • Bolt’s early 2022 valuation compared to its 2021 revenue: 367x.
  • Bolt’s early 2022 valuation compared to its Q1 2022 run rate: 382x.
  • Bolt’s early 2022 valuation compared to its expected 2022 revenue: 250x.

Presuming that Bolt doubles in size again in 2023 ($88 million worth of revenue), the company would close that year with a revenue multiple of 125x. And if it doubled again the following year ($176 million), it would still be valued at 62.5x at the end of 2024.

Note that those pieces of basic math are generous, anticipating as they do a re-acceleration of Bolt’s growth from around 50% this year to 100% for the following two. If we instead anticipated a 50% growth rate for both 2023 and 2024, the company would close out the latter year with a trailing multiple of 111x.

The question for Bolt is what sort of multiple it has to obtain to reach market-pricing parity. Sadly for Bolt, fintech valuations have come down sharply in recent quarters, steepening the road ahead even as it works to rebuild itself. From our coverage last week:

Enter Future, a16z’s in-house publication that it built during a fit of anti-media sentiment among the technology class. Per this piece on the investing group’s blog, public fintech companies’ valuations peaked at around a 25x forward revenue multiple in October 2021. Since then, the same fintech cohort of stocks has fallen to around 4x their forward revenue (we’re reading from a chart, so the data cited here is more directional than exact).

Bolt would need north of $2.5 billion in yearly revenue to make a 4x multiple work. Naturally, it may be able to earn a higher multiple, but the company’s $11 billion valuation is incredibly hard to surmount when the company’s Q1 2022 revenue was so modest. (Note that The Information reports that Bolt revenue in the first quarter was lower than its year-ago comp due to a pricing change; that doesn’t inspire confidence, as it implies a lack of leverage against customers.)

If you try to figure out the growth rate required for Bolt to level up to its final valuation and are getting years and years of time required, keep in mind that cash is not infinite and that companies cannot run super low on cash because it puts them at risk of death. So, more capital is going to be required. That implies a down round, right?

Perhaps the ending of so much unicorn indigestion is not merely a humbling of the founders and investors who got high on their own supply last year but also a slimming down by the stark realities of eventual cash concerns.