$100M ARR Club: New Members & Future Growth Startups

Time passes quickly.

Almost a year ago, The Exchange began tracking startups that achieved $100 million in yearly recurring revenue, or ARR. The intention was to identify which highly valued private companies demonstrated substantial growth, allowing us to monitor potential future IPO candidates.

We initially identified Bill.com, Asana, WalkMe and Druva as notably large and rapidly expanding businesses. Since that initial report, two of those four companies have completed their initial public offerings.

GitLab, Egnyte, Braze and O’Reilly Media all attained this milestone prior to the end of 2019, with a couple of these companies discussing their growth strategies at the recent Disrupt conference.

In early 2020, we included Sisense, Siteminder, Monday.com and Lemonade in our list, and also covered ExtraHop’s journey to $100 million ARR, Cloudinary’s significant growth without outside funding, Siteminder’s performance, and BounceX’s achievement of $100 million ARR alongside its rebranding as Wunderkind.

Throughout the remainder of the year, MetroMile, Tricentis, Kaltura and Diligent also joined the group. This was followed by Recorded Future, ON24 and ActiveCampaign. Additional companies reaching this revenue level included Movable Ink, Noom, Riskified, Seismic, ThoughtSpot, Snow Software, A Cloud Guru, Zeta Global and Upgrade.

Today, we are adding three more companies to this list: UserTesting, Udemy’s business division and Expensify. Beyond simply acknowledging these additions – further details are available below – I want to adjust our focus as we move into 2021.

The Exchange will continue to monitor startups and other private companies that reach $100 million in ARR, or annual run rate. However, next year we will also seek out startups generating around $50 million ARR that are experiencing rapid growth. We aim to observe growth trajectories a year or two earlier, to better understand how startups scale to nine-figure revenues, rather than reporting on it retrospectively.

Therefore, if your startup is expanding quickly and anticipates reaching the $50 million revenue threshold within the next quarter or two, please reach out. I believe a significant portion of the global unicorn market could meet these criteria, potentially offering insight into which highly valued startups are justifying their valuations.

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This will be an interesting endeavor. Now, let’s briefly discuss the newest members of the $100 million ARR club.

UserTesting, Expensify and Udemy’s business arm

You are likely familiar with each of the companies we’re discussing today, all of which have achieved $100 million in Annual Recurring Revenue (ARR), so a lengthy introduction isn’t necessary. Here’s an overview of each:

Expensify

Expensify is a widely recognized expense-tracking solution within the technology sector, and it recently surpassed the $100 million ARR milestone, an accomplishment announced yesterday.

However, the company went beyond simply releasing this single statistic and then pausing updates. Expensify also revealed that it has “maintained profitability for several years [and] achieved its highest monthly revenue to date in October.”

That’s a significant achievement! It’s even more notable considering the company has raised just over $20 million in total funding and reports “lifetime revenue exceeding $215 million.” Expensify states that it has generated more than $10 in revenue for every dollar of funding received. The software provider also indicated that its EBITDA margins, a measure of adjusted profitability, are above 25% and continuing to improve.

With revenue growth of 283% since 2018, Expensify appears to be a strong candidate for an Initial Public Offering (IPO). However, it isn’t under pressure to pursue one quickly, as it doesn’t have substantial capital investments requiring a rapid exit. Its profitability allows it to determine its own strategic direction.

It’s somewhat disappointing that detailed financial information isn’t publicly available, as the company is now large enough to consider going public. However, I wouldn’t anticipate an IPO for at least another three quarters, even if that is their current objective.

Considering its profitability and substantial growth, Expensify is likely to command a revenue multiple above the market average, potentially valuing it around $2 billion — or even higher — based on current valuations.

UserTesting

I acknowledge that our coverage of UserTesting’s news is delayed. That’s an oversight on my part, but recent events, including the election and numerous IPOs, have created a busy period. Nevertheless, let’s discuss the news now.

UserTesting announced that it exceeded $100 million ARR in late September, meaning it reached this benchmark before the beginning of Q4 2020. This provides a useful timeframe for tracking its growth in future quarters.

The company assists other businesses in testing websites, applications, marketing materials, or prototypes with real users to gather feedback that can be used to improve development and other areas.

As reported by Crunchbase News, UserTesting secured $100 million in funding earlier this year.

Unfortunately, a new valuation for the company’s latest funding round isn’t currently available. Fortunately, PitchBook data indicates that UserTesting raised funds in a small round in early 2019, a year before its most recent investment, which valued the company at $272 million post-money. Given that the company raised $100 million a year later and then surpassed $100 million ARR, its current value is undoubtedly a multiple of that earlier figure.

Determining the exact multiple is challenging. The company provided limited details regarding its recent financial performance, only stating that it is “growing rapidly year-over-year” and that its EMEA region has experienced an impressive 400% growth in its customer base in its first year, following the establishment of a European headquarters in Scotland.

We are particularly interested in understanding its gross margins, their recent trends, and the speed of its growth. Does the company’s reliance on human feedback suggest that its gross margins—an indicator of revenue quality—are more similar to Twilio’s than Slack’s? Or are they even lower?

Insight Partners, Accel, and Kern Whelan Capital have led investment rounds in the company. Greenspring Associates and OpenView are also listed by Crunchbase as investors in the California-based company.

Udemy’s business arm

Lastly, Udemy. Or, more specifically, a segment of Udemy.

The growth of the edtech industry in 2020 has been impossible to ignore, resulting in frequent mentions of Udemy and similar companies on TechCrunch in recent months.

However, it was surprising to learn that a single portion of Udemy’s operations has reached the $100 million ARR threshold. According to an October announcement, Udemy for Business grew from $1 million ARR to $100 million in just five years. Udemy for Business focuses on providing its services to companies to enhance employee training.

Considering the increasing adoption of LinkedIn Learning — formerly Linda.com — another enterprise education platform, it’s not unexpected that Udemy’s corporate initiatives are also thriving. The pandemic has accelerated growth for numerous startups this year, and Udemy appears to be benefiting from the global expansion in edtech usage and demand.

The company raised $50 million at a $2.05 billion valuation earlier this year, and after TechCrunch reported it was seeking another $100 million at a $3.32 billion valuation, it disclosed that it secured an additional $50 million at a $3.3 billion post-money valuation. It’s common for late-stage investments to be completed in multiple tranches, so another $50 million may be forthcoming for Udemy.

I’m hesitant to speculate on Udemy’s overall value, as there aren’t many comparable publicly traded edtech companies. Therefore, we’ll refrain from commenting on its worth for now. However, if a portion of Udemy is generating nine-figure revenue, the entire company is undoubtedly IPO-ready and should consider making its financial data public.

It’s time for transparency, Udemy. TechCrunch has been covering your progress since your 2010 seed round — you can find the archives here — so it’s time to share your financial details!