Hello and welcome back to our regular morning look at private companies, public markets and the gray space in between.
When we kicked off our series on private companies that have reached $100 million ARR, we didn’t expect it to last. Maybe a piece or two, but nothing more. Today’s entry should bring us past the 30 company mark.
It was less than a month ago that we added eight names to the club in a single post (HeadSpin, UiPath, DigitalOcean, BounceX, Wrike, Aeris, Podium and Lucid), the latter two having recently raised capital, announcing their revenue milestones at the same time. This morning, we’re appending just three names, but pay attention all the same.
We joked in February that our running tally of growth-oriented, private companies that had reached $100 million in annual recurring revenue read like a list of firms that either could, or should, go public in short order. Since then, the IPO market has largely closed in light of COVID-19, so I suppose we’re more adding to the backlog than queuing up companies for an S-1.
Either way, let’s talk about ActiveCampaign, Recorded Future and ON24 this morning!
New names
We’ll start, then, with Recorded Future.
Recorded Future
Boston-based Recorded Future, a cybersecurity company focused on “threat intelligence,” announced that it crossed the $100 million ARR mark recently, making the firm a success story for its city. But as with so many companies that we add to our list, its inclusion is slightly fraught.
We don’t have a rule against private companies that have sold themselves to private equity, but all the same it feels a little different than covering companies that are still in control of their own life. Regardless, Recorded Future sold to Insight Partners in May of 2019 for $780 million, providing an exit to its backers including GV, Balderton Capital, REV and Insight Partners (the group led Recorded Future’s Series E, according to Crunchbase.)
Let’s not quibble too much. Recorded Future put itself in our good graces by sharing a few growth metrics along with its ARR milestone, including that its recurring revenue expanded “on average by 80% year-over-year for the last five consecutive years.” TechCrunch wanted a more recent number, which Recorded Future shared, telling us that that it grew 53% in 2019. Notably the firm doesn’t anticipate COVID-19 “significantly impacting” its 2020 growth.
Back to the IPO candidate idea then, here’s one more.
ON24
It’s only fitting that a firm that helps power remote work winds up on our $100 million ARR list. ON24 won’t be the last.
The company, based in San Francisco and backed by a known $72.4 million in venture capital, pivoted to SaaS in 2014, which went well. We can infer that because after a roughly eight-year fundraising gap, the company put together a $25 million round from Goldman Sachs in 2016, two years after it moved to Software as a Service. That it reached $100 million ARR just four years later underscores the point.
Backed by (per Crunchbase) Canaan Partners, Rho Ventures, U.S. Venture Partners and Goldman Sachs, ON24 sells software that lets companies host webinars, videos and tailored content for different users. If you need to explain your product over the Internet, ON24 wants to help. I wonder if it’s seen any recent growth.
The company’s $100 million ARR milestone was announced this week, making this particular record incredibly fresh. ON24 is an obvious IPO candidate, as it seems unlikely that talking to people more digitally — and less IRL — will lose its luster in a world where few travelers are earning frequent-flier miles.
ON24 is not the only company we’ve seen pivot to SaaS and pull it off — Adobe is probably the most famous example; Microsoft is another. Hell, Apple’s move to services has gone all right as well, and Google is hoping to de-risk Alphabet’s revenue mix away with GSuite and other efforts. That ON24 is another company to pull the move off shows, again, how if software is eating the world, SaaS has already eaten software.
ActiveCampaign
Chicago-based ActiveCampaign works in marketing tooling. The software company does email marketing, some light CRM work and “marketing automation.” The latter is a term that I’ve had explained to me a few times, but have yet to find a way to condense to fewer words than “making all the bits of your marketing efforts work together, instead of in direct opposition to one another.”
No matter. The company announced its $100 million ARR result today, making ActiveCampaign truly the newest addition to our little club. Happily for its investors, the firm reached the revenue milestone just a few months after it closed a monster, $100 million Series B led by Susquehanna Growth Equity; Silversmith Capital Partners led its $20 million Series A in 2016.
(I went to school in Chicago and essentially grew up in its tech scene; to see a company based in the city do well always makes me somewhat glad. This is my bias.)
Notably ActiveCampaign — akin to ON24 — was a company that moved to SaaS later in life, finding that the model helped it grow. According to its CEO, Jason VandeBoom, his company’s expansion “massively accelerated” when it moved to SaaS. The executive told TechCrunch in an email that when the company moved to the SaaS model in 2016 it had “just over $6 million in ARR.” To run that up to $100 million in four years or so is impressive.
ActiveCampaign grew 60% in 2019, which VandeBoom attributed to “continuous improvement and long-term planning” and “consistently improving retention of existing customers.” If you need translation of that second bit, what the CEO is saying is that his firm is always working to lose (churn) fewer customers while selling more of its software to folks that are already users of its tooling (retention).
The firm claims 100,000 customers.
While we had the CEO’s attention, TechCrunch wanted to know if ActiveCampaign was taking incoming fire from COVID-19 and its related economic and labor disruptions. As some other SMB-focused software companies have told us, the answer is no. Here’s VandeBoom:
We anticipate continued growth in 2020 and are already seeing further acceleration to support this. The past four months have been the best in company history and we’ve seen monthly trials double in that timeframe and new customer acquisition numbers at 4500, 5500, 6000 and 7000 respectively from January to April.
He did hedge those results a little, adding that while his firm has “seen some acceleration from COVID-19 and the digital transformation that it is inspiring,” the CEO is more convinced that “the need for customer experience is what is fueling the majority of this growth.”
Either way, ActiveCampaign is yet another company that in other times we’d start to email every other week, asking when they intend on going public. The answer could be as soon as Q4 2020 if the waters calm, but it’s probably more likely to happen in 2021. This is one S-1 filing we’re looking forward to.
And that’s that for now. More as we have them. Email us if you are about to reach, or have passed, the nine-figure annual recurring revenue mark.
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