SaaS Interviews with CEOs, Startups, Founders
MailUpGroup Market Cap Is $65m, CEO Feels Undervalued
08 Jul 2020
Chapter 1: What is MailUp Group's revenue and customer growth for this year?
This year, our overall revenue will be around 60 million, so 6-0. And how many customers will you break by the end of this year? Could be overall 22,000. You are listening to Conversations with Nathan Latka. Now, if you're hearing this, it means you're not currently on our subscriber feed. To subscribe, go to getlatka.com. When you subscribe, you won't hear ads like this one.
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Now look, I never want money to be the reason you can't listen to episodes. On the checkout page, you'll see an option to request free access. I grant 100% of those requests, no questions asked. Hello, everyone. My guest today is Nazareno Gourney.
He is leading a company called MailUp Group, which is a leading player in the field of cloud marketing technologies, offering a broad spectrum of solutions with a focus on data-driven omni-channel marketing automation. All right, Nazareno, you ready to take us to the top? Yeah, ready. So just be clear, so is this an SMB play or are you really dealing with enterprises mostly? Mostly SMB, yes.
Okay. But also we have some very large enterprise too. Can you quantify that? So the average customer is paying you what, 10, 20 bucks a month or like 10 or 20 grand a year? The average could be, but it depends if you are thinking about just about B3.io or the whole group because we have different business units, so... I mean, let's say, generally speaking, kind of all together, right?
Or the one that's doing the most revenue? It really depends because the largest clients is about 10 million euros, just one. Yep. Over about 60. But the average clients could be around 2,000 euros per year. So it's really a very broad spectrum. Okay. Got it. Yeah. When you came on about a year ago, you'd articulated that ARPU was about $146 across 20,000 customers.
So you're doing about $2.9 million a month at that point in revenue. Are you still about that size or have you grown? We are grown to this year. Our overall revenue will be around 60 million. So 60. Yep. So growing more than 50%. That's good. And how many customers will you break by the end of this year? It could be overall 22,000. So not that much compared to last year.
Well, I mean, if you added 2,000 high paying customers, that's still a lot of growth. Yeah. Right. So it still works. I mean, is that the case since over the past 12 months? Have you moved more upstream? Yes, we are moving upstream thanks to the more sophisticated solutions such as datatrix.com. But we are also growing a lot with befree.io, especially in the segment of the SaaS cloud software.
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Chapter 2: How does MailUp Group serve both SMBs and large enterprises?
40 million, almost 40 million. Four zero? Yes. Up from how much a year ago? 24. I mean, that's pretty good growth. Now, is that a high-margin business, or do you have to pay a bunch of fees back to Verizon? Yes, of course. This is a commodity. We are buying SMS and selling SMS. We are in the middle, but the margin is about 8% to 10%, so not that bad.
Chapter 3: What is the average revenue per customer for MailUp Group?
So you'll make $4 million in gross revenue on $40 million top line. Yes. The good part is that it's just 15 people, so just 15 employees are able to manage all this revenue and all this growth. Without not too much investment. Yeah, so if you take $4 million, which is 10% on the $40 million in transaction volume through you, right across 15 employees, it's like $270,000 in revenue per employee.
That's not bad. Yeah. Okay, any other products besides Agile, Telecom, Datatricks, and BeFree? We have a mail app, mailapp.com.
uh this is this the business where we started many years ago so and gives the name to the group mail up group and this is a very powerful email and sms delivery platform but sold to marketers okay in italy we are the market leader so we serve all kind of clients from very small restaurants to very large banks
And this is a traditional SaaS business, so nothing very innovative because, you know, sending emails, newsletters, email campaigns is something quite common with a lot of players. So what revenue will MailUp do this year, you think? 15 million. 5-0 or 1-5? 15, 1-5. Up from how much a year ago? It was about 12. Okay, that's pretty good. You got a lot of numbers to keep track of.
You know them off the top of your head. That's pretty good. Yes, yes. I talk a lot with investors, so I need to be ready. Well, yeah, because you guys are a publicly traded company. Now, did you personally, were you there at the company when you guys went public? Yes, I'm one of the founders.
We are five founders, and we did the IPO in the AIM market, which is an alternative investment market, so for small cap in Italy. Okay. In 2014. And how much money did you raise at the IPO? 3 million euros. Okay. Our revenue at that time was 6. So we raised enough. Yes. And have you raised anything additionally since then? Yes.
After three years, so two years ago, we raised another 6 million euros. So another capital increase, mainly from institutional investors. So it's a secondary? Yes. Yeah. Yes. So in the beginning, we had mostly smaller investors, digital entrepreneurs mostly. While in the second round in 2017, we got on board with the big institutional funds.
Did most of those funds, the $6 million, go to buying out early shareholders or did it go to the balance sheet? To the balance sheet. So it's completely capital increase. Okay, got it. So you still have early shareholders on your thing back from 2002? Yes. Yes. Originally, we had 20%. Today, we have 11.5%.
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Chapter 4: How has MailUp Group's revenue changed over the past year?
So... after two capital increases. Yep, that's good. Now, what's the team size today, total people? 240. 240, that's great. Now, if you look at just your SaaS products, right? So ignore, let's see, ignore, mail up is SaaS, but ignore agile telecom. So just Datrix, BeFree, and mail up. What's gross revenue churn annually? Growth in terms of revenue, you mean? No, no, gross revenue churn.
Oh, okay. Well, it depends. The average could be around 12%. Okay. Which one is the most sticky of those three products? The most sticky is B-Plugin. So the editor sold to other software companies, which is easy to understand because once you embed this piece of software within your application to enable your users to create beautiful images easily,
then it's very difficult to get rid of it because users get used to use this editor and they want it. So it's very difficult to... In fact, actually, the net churn rate is negative. How negative? Yeah. Uh, it's about six, 7% negative. Okay. That means your expansion revenue annually is about 20%, which makes up for the 12% churn. Yes. Yes. We were also able to raise prices, uh, last year.
So this also helps. Yeah. Raise prices in 2018. Yeah. That's great. Now. And also this year. So we are changing pricing every six months, more or less. Always increasing. Uh, yes. At the end. Yes. So guys go, go buy now. All right, and what's your guys' I didn't look it up. What's your market cap today? It's about 65 million euros. Is that fair? No, not at all. It's about one times the sales.
It could be a good multipolar if you take the SMS business, which is one times the revenue usually. But in terms of SaaS business, we should be valued at least three, four times more. So we see a gap in this. Well, you're doing about $20 million in pure SaaS revenue, correct? Uh, yes, more or less. Yes. Yeah.
So if you take 20 million, ignore the agile telecom, cause really that's a 40 million GMV business, but you're only taking 4 million in gross profit, right? So let's give that a two X multiple and put that at 8 million. If you take your SAS revenue at 20 million though, and you're at 65 million cap today, that's like a three X multiple on your SAS revenue. That's not bad.
Yes, but we have 40 million of the SMS. Yeah, but that's not really revenue, though. That's money going through your system. You only keep 4 million of the 40. Yes, but if we sell Agile Telecom today, the value could be around 30, 35 millions. There are deals in this field, and this is the valuation of Agile Telecom. which means that the SaaS business is evaluated 1.5, not more.
So if someone came to you and offered to buy just mail-up from you, right? So you're doing 15 million right now, up from 12 million a year ago, and they offered you $45 million to buy just mail-up, all cash up front, would you take the deal? Uh... Difficult to say because we are using the MailApp client base to cross-sell Datatrix.
Because Datatrix is 10 times more expensive than MailApp, the average revenue per client, which means that we would lose an opportunity selling MailApp alone. How many customers are on Datatrix right now alone? About 300. 300, okay, very good. It was a startup one year ago, it was 35, so... They are growing a lot, 10 times. Yeah, very good. All right, let's wrap up here with the famous five.
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