How UserTesting’s Growth Sped Up on the Way to $100M ARR

The iron law of SaaS is that growth rates decay as revenue bases grow. When Nathan got UserTesting CEO Andy MacMillan on the show in March 2020, in the first days of the COVID crash — MacMillan in his garage, working on a ping-pong table in front of a green screen, his three kids at home sheltering in place — MacMillan said the company was breaking that law. It was growing about 40%, up from about 25% when the two had last spoken eighteen or nineteen months earlier, and he expected it to cross $100M in ARR “probably mid this year.” That was a forecast, not a result. UserTesting’s later SEC filings show how the year landed: revenue of $102.2M for 2020 and $147.4M for 2021, according to its 10-K for 2021.

Nathan, not a man free with compliments, said on air that you rarely see growth pick up on a larger base. The tape records how MacMillan explained it — plus one piece of news nobody else had yet.

The $100M disclosed before the press release

Mid-interview, asked whether the cap table had changed, MacMillan rewrote it: “We actually just raised a round. We’re doing this interview, we’re recording it, we’re gonna do a press release in two days… we just raised a $100,000,000 from Insight Partners, and have yet to announce that publicly.” The release, dated March 19, 2020, named Insight Partners as lead, with existing investors Accel, OpenView and Greenspring participating. The round had closed, he said, “three weeks ago, four weeks ago. So really before it hit The US”, and the S-1 UserTesting filed in October 2021 records the round’s preferred shares as sold in February 2020.

That left UserTesting freshly funded just as markets were crashing. MacMillan’s posture with the money was the opposite of hoarding: “We’re definitely leaning into growth,” he said, because customers were telling UserTesting “we need this help,” and some were calling to move in-person events they had planned onto the platform.

$100Mraised from Insight Partners — closed, MacMillan said, three or four weeks before the recording, and disclosed on air two days ahead of the press release

What the product sells: watching your own customer

UserTesting lets teams “virtually look over the shoulder” of a real user and see “what’s it like to do mobile banking or to use your mobile ordering app.” The company started out pay-as-you-go, where a customer could pay for a single video; for the five years before the interview it had been entirely subscription SaaS. In March 2020 MacMillan put it at about 3,500 SaaS customers paying on annual subscriptions, from small-business accounts up to research and design teams at some of the largest tech companies in the world “that might be spending, you know, over $1,000,000 a year with us.”

That customer count needs a footnote. The S-1 counts customers differently: it treats a parent company and all its subsidiaries and divisions as one customer, and it reports 1,430 customers as of March 31, 2020, rounded down to the nearest ten. MacMillan did not say on the call how his 3,500 were counted, so the two figures cannot be reconciled from the tape. Read 3,500 as his count, not the filing’s.

MacMillan credited the acceleration to two things. Companies were hiring more of his core buyer, the UX researcher, and other teams — “product teams, design teams, marketing teams” — had started running their own tests. “Our largest customer a couple years ago might have had 20 or 30 seats,” he said, and UserTesting was now working with a customer “that’s looking at doing over 10,000 seats with us.” That deal was still being worked on, not signed.

The org-design religion: success sells nothing

Under the retention numbers — about 86% gross revenue retention, which he restated as 14% gross churn, and net retention a little over 100%, both improving — sits the structural decision MacMillan said he sometimes ends up debating on SaaS stages:

“I have a chief customer officer who reports directly to me and they are solely responsible for making sure the customers are successful. They don’t sell them anything, they don’t upsell them anything… Then I have my sales team and their job is to manage the contracts and growth and expansion and everything like that… I view gross dollar retention as really an outcome metric from doing those things right.”

Andy MacMillan, CEO, UserTesting, March 2020

MacMillan’s “little over” 100% squares with the S-1, which puts UserTesting’s net dollar-based retention rate at 106% as of March 31, 2020, the quarter of this interview, and shows it rising to 114% at December 31, 2020 and 117% at June 30, 2021: the improvement he said he was starting to see. The filing does not credit the org chart for it, and neither should we.

The discipline extended to spending. Nathan suggested that before the raise UserTesting had been burning $1–2M a month, and MacMillan said that was “probably right about where we were.” Pipeline had grown 75% year over year in 2019, and he refused the late-stage habit of doubling the sales team and hoping for the best: “that’s just not really our MO at UserTesting… I’m confident that I can grow the business comfortably and not just, you know, throw money at hope.” When Nathan asked whether net-new bookings had passed $10M in a quarter yet, MacMillan said yes, in Q4 2019, and probably again in Q1. The rest of the machine, by his count in March 2020:

International revenue, he said, was already more than 10% of the total. And MacMillan told Nathan that by the time the episode was live, UserTesting would have announced it was acquiring Teston, a Norwegian company that let customers test in languages the platform did not yet support. UserTesting’s 10-K for 2021 dates the purchase agreement for Teston AS to March 17, 2020, at a total price of $10.9 million.

UserTesting revenue after the interview: what the filings show

MacMillan gave growth rates on the call, not a revenue figure. The dollar estimates on the tape are Nathan’s own: $40–50M in 2017 and $65–70M in 2018 when he paid his compliment, and $80–85M or so of ARR in his closing recap. MacMillan did not confirm any of them. The audited numbers came later, in the 10-K UserTesting filed in March 2022:

Calendar years ended December 31. Growth rates as stated in the 10-K.

The forecast squares with the record: 2020 revenue alone came to $102.2M. The filings do not say in which month ARR passed $100M, so they cannot confirm his “mid this year” timing. And full-year revenue grew 33% in 2020, below the “about 40%” MacMillan described in March. The two measure different things, a growth rate at one moment against a whole year’s revenue, but the gap is worth stating. Growth then rose to 44% in 2021.

• November 2021 · NYSE IPO UserTesting listed on the New York Stock Exchange as USER, selling 10,000,000 shares at $14.00 (10-K for 2021).
• October 27, 2022 · Agreement to go private Thoma Bravo and Sunstone Partners agreed to buy the company for $7.50 a share in cash, about $1.3 billion, and to combine it with UserZoom (company release).
• January 12, 2023 · Private again The deal closed, the stock stopped trading, and MacMillan was named to lead the combined company (company release).
• September 3, 2024 · CEO change MacMillan stepped down after more than six years as CEO; Eric Johnson succeeded him (company release).

On the tape, MacMillan had put an IPO some way off: “I love the idea of being a public company at some point, but I don’t think it’s in the near term for us having just raised that round. I would think, you know, we’ve got twenty four, thirty six months or something before we’ll get real serious” about it. The listing came sooner, about 20 months after the interview. The public chapter was short: the IPO priced at $14.00 a share, and the take-private paid $7.50 fourteen months later. Current numbers live on UserTesting’s GetLatka profile; the full interview is here.

His answer to the closing question — what he wished his 20-year-old self knew — lands differently from a CEO whose product is watching other people use software: “to probably focus as much on relationships as gathering knowledge. I think at this point in my life, I’ve realized it’s all about the people.”