SaaS Interviews with CEOs, Startups, Founders
1554 $130M ARR Vista Owned Company Made These 2 Moves Right After Acquisition
26 Oct 2019
Chapter 1: What company is being discussed and what is its current ARR?
now leading a company called numerator about to pass 130 million bucks in ARR. That's up from a hundred million dollar run rate just a year ago. So healthy growth, uh, owned by private equity firm, uh, Vista equity. They've passed 2000 customers, mainly all the big CPG guys, you know, average contract values, call it five, six, seven grand per month. Uh, there, you know,
Not as aggressive as some other portfolio companies in terms of dollar-based tax, spending up to a dollar to get a new dollar of ARR, or about 25% of their total revenue on sales and marketing. First moves, again, bring efficiency to the sales team. One instance, the Salesforce, that was what they did first two moves kind of after the Salesforce acquisition.
Again, company launched in 2014, team of about 1,500, today growing rapidly. Hello, everyone. My guest today is Dennis Moore. He is a husband, a father, studied statistics at Michigan, plays sports like golf and paddle tennis, and loves to use data to analyze things. Professionally, that means using data to help CPG companies make better decisions.
And personally, that means a love for poker and wagering. The company is called Numerator.com. Dennis, are you ready to take us to the top? Sure am. Over the past 12 months, how much money have you made playing poker? Oh, geez. Probably negative something. Okay. So should we listen to this interview or not? No. Not if it's about poker advice, no. All right.
Chapter 2: What strategies did Numerator implement after being acquired by Vista Equity?
What's Numerator doing? What's your revenue model? How do you make money? Yeah, we collect information that big companies, CPG companies like Procter, Koch, Kraft, companies like that need to understand how advertising, promotion, and pricing are trending in their industries. Okay. So, a couple questions on this.
Obviously, your data is only going to the inputs you feed it and then how you use that data. So, what are your inputs? So probably our most important input is a panel of consumers. We have about 300,000 people in the United States who send us all of their receipts. So when they shop in a store, they snap a picture of their receipt.
When they shop online, they've given us opt-in permission to collect their email receipts, either from their email box or out of their Amazon account. Sandy, that's direct or you've partnered with an app that is like a receipt imaging app and you take that data? We have our own app. So there's two apps. One's called Shoparoo and one's called Receipt Hog. Anyone can download them on the app store.
And it's very direct. It's actually an important point. Our relationship is very direct with the consumers. They know they are signing up to send us their receipts. Do you pay them for it? We pay them for it. One of the apps is charitable based. If you ever cut out the box tops off your cereal boxes when you're a kid for your school. So one of our apps donates money to schools.
Every time you upload a receipt back, we gave $750,000 to schools last year, collecting receipts that way. The other one is gamified. There's another app that, you know, if you're not charitably motivated, we'll give you some tokens and you can play a game, that sort of thing. But the point is that people know what they're doing. It's not like we're sneaking the data away from them. No, no.
By the way, I think that's the future, right? I think if Facebook had a business model where they paid users some amount of cents, 10 cents, whatever, a month for all their data, we wouldn't have all these issues we're having now about you're collecting unwanted data, right? So I love it. Okay, good. I understand the data input now. And give me a sense of kind of the velocity of that pipeline.
How many receipts per month are you collecting? Oh my gosh. We collect about one out of every 500 receipts in the grocery stores across the country. So it's hundreds of thousands of receipts a day. Okay. Hundreds of thousands a day. But you don't know the number, like for the, you don't know like last month, how many you got total?
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Chapter 3: How does Numerator collect consumer data for its services?
I don't know. I know we've crossed over 500 million in our lifetime, like in the four years that we've been in business, but I'd have to do that.
Chapter 4: What is Numerator's revenue model and how do they make money?
That's helpful. Okay. You said this is across 400,000 users? Correct. Okay. That's great. Okay. Now let's go to the next step. So how do you then make, how do you add utility value to the data to get CPG brands to pay you? Yeah. So the main thing is in sort of measurements of market share.
So if you think about loyalty data, so think about a retailer, for instance, a retailer knows a lot about who shops in their store, right? The loyalty card gives them, but they don't know what those people buy when they're in another store. And that's actually pretty important. That's my poker analogy. It's like you, You don't know what the other guy's holding. That's the important fact.
Similarly with the manufacturers, what's going on is because the retail landscape has changed so much in the last few years. It used to be if you knew what you sold in grocery stores, you knew most of your sales. But now people buy online. They buy in Ultas and Sephoras and Dollar Shave Club.
And just like the way that CPG products get sold is so vast that you need sort of a wide range of consumer data to kind of track all the sales. And so that's the primary value we have is really measuring the full omni-channel from physical store to online store. And is this a SaaS product for CPG brands or papered line of data or what? It's a little of both.
I mean, so there's, it's a SaaS based model, but there's also a services component. So people would sign up for a subscription and they can access their own data and do a lot of their own reporting. But there's also times when the business use case is a little bit more involved and the client wants, in addition to the subscription, they want some professional services help and we provide both.
Over the past 12 months, if your whole revenue pie is 100%, what percentage was professional services versus SaaS? Probably, I'm trying to think, probably about, it's about probably about a third of the panel business. The panel business itself is about half. So it's probably somewhere in the order of 20% of our revenue is probably services.
Okay, not crazy, especially if it has some attention on the SaaS product. Yeah, we generally speaking, we try and provide like one person's worth of service for every million dollars of stuff you buy from us. Yeah, that's pretty good. And then, okay, so let's just focus on the SaaS company today.
So I'm sure you have a bunch of different cohorts, but I'm going to force you into an average here just because we're short on time. So what's the average customer pay you per month or per year, would you say? Per year is probably high five figures, probably like 75. I'm guessing a little bit, but it is a brand average. But yeah, it's probably a high five figure annual subscription. Okay, got it.
So call it 75 grand a year, maybe around 60, you know, 6,200 bucks per month, something like that. And put this on a timeline for us, Dennis, before we get too deep here. When did you launch the company? What year? Well, the company is really a concatenation of about 12 different acquisitions. So, I'm not the founder, you know, I'm sort of the P.E. CEO of the accumulated companies.
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Chapter 5: How does Numerator measure market share for CPG brands?
Yeah. Yeah, so 130 run rate today. Help me understand growth a year ago where we're at, November 2017. We're just over 100, just over 100. Okay, so pretty healthy growth. Now, of this kind of 30 million and kind of new bookings you've driven over the past 12 months, what percent of that has come from expansion versus totally new customer ads? Yeah.
I mean, most of it is from expansion in the sense that we had multiple, you know, we had these multiple companies we've tied together. And so we might start to sell the new service to a company that was already buying something else from us.
You know, so I would say it's so it's expansion, but it has an element of new business because to the company, to the client who's buying, it's a brand new service from us. Yep. That's interesting. So someone that signs up, I'm gonna use easy numbers here. Someone that signs up for your product brand new today for a hundred grand a year, a hundred thousand dollar ACV.
Typically when you put them through this well-oiled system you've built, what will that expand to in year two? Um, I think on average we'd say somewhere like $130. Pretty healthy. Something like that. What it tends to be is a little bit lumpy, though, because what can happen is there are certain services that if they expand to it, they might double or triple their revenue, right?
And then there are other services where they just sort of make a marginal expansion by maybe ā expanding the box of data a little bit, you know. And let's stay on kind of this line for a second, which is kind of cohort analysis. So that same cohort, you know, a year from today, it sounds like there's some expansion, maybe average 30% expansion.
Let's talk about the flip side of that gross revenue churn. What's gross revenue churn on that cohort? Churn is probably, we're kind of coming in the Our net retention rate is probably just shy of 90. So in the mid to upper 80s right now, there's one line of business that we have where we collect data by scraping data off the web, sort of price information.
And that tends to be a business line that there's just a lot of people doing that space right now. And so we do have a little bit more churn on that side of our business than we wish we had. So Dennis, I want to make sure I understood that real quick. So you said net revenue retention is 90%? Yes, correct. Okay.
And so just to make, be clear, if 30% of the expansion, right, which means that's essentially, you know, so if I take 30% off the 90, I mean, I can basically say you guys are what churning, what about how, I mean, it's a pretty significant amount of churn, gross revenue churn. Maybe we're talking about it a little bit differently.
I'm talking about of all the bookings that I have, and I set price increases aside, just how much of what I had last year do I keep? About 10% of my base I'm losing, but then of the 90 that stays, I'm expanding that. So my net, so I'm going to say your net retention is over. My growth with my existing customers is larger than the churn I'm losing. Yeah, yeah. Okay, okay.
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