Xactly, From IPO to Vista: What Chris Cabrera Built After Going Private

Chris Cabrera founded Xactly in 2005 to run sales commissions in the cloud instead of in spreadsheets. The company listed on the New York Stock Exchange in June 2015 at $8.00 a share. In May 2017 it agreed to sell itself to Vista Equity Partners for $15.65 a share in cash, a total value of about $564 million, and the deal closed on July 31, 2017, according to Xactly’s SEC filings. Its last filed revenue was $95.5 million, for the fiscal year that ended January 31, 2017.

About two years into Vista’s ownership, Cabrera, still founder and CEO, sat down with Nathan Latka for an interview published on July 10, 2019. It was his second conversation with Latka (“it’s only been less than a year since I talked to you last”). He gave no revenue figure. What he described instead was how the business had changed under a private-equity owner: 1,600 customers, three acquisitions in fifteen months, year-one customer cohorts expanding “well north of 100%,” a Denver office that had grown from about 75 people to 350, and contracts stretched from three years to five or seven.

Why Cabrera started Xactly

Before Xactly, Cabrera sold on-premise compensation software for a competitor. Salesforce, he said, was the customer that “sort of pushed me out of the nest”: it would not buy installed software because it was “the wrong religion, it needs to be SaaS.” He tried “like heck” to get his employer to move to the cloud, failed, and, as he put it, “we might have had some bad words that ended in me getting fired.”

I was going into Christmas in 2004 without a job, but with Salesforce saying you know, if you build this we will come, and I had eight years of experience in this compensation you know realm and you know it was kind of a no brainer to go start this company.

Salesforce “became my very first customer,” he said, and when Latka asked whether it had also put money in: “They were an investor too.” Xactly partnered with Salesforce from the start, and with Oracle and others, and went after companies with 300, 400 or 500 salespeople that were still working out commissions in Excel. Those buyers had “tons of pain, lots of error rates” and no way for a rep to see pay on the web or a phone. “It was a little bit like you know shooting ducks in the pond in those early days because you know the ROIs were phenomenal,” he said. The first hundred customers were mostly high-tech companies already buying SaaS, and Xactly was usually the first or second SaaS app they bought. The longer version of the founding, he said, is in his book, Game the Plan.

What Xactly sees in its customers’ pay plans

Latka opened with a debate he said he had had with many SaaS CEOs on his show: should customer success teams earn commission on the expansion revenue they drive? Cabrera split the answer. Renewal teams, which Xactly calls customer account managers, “are absolutely getting paid commissions very much like a sales rep base plus commission.” Service staff who are not responsible for renewals usually get bonuses instead, without the multipliers, kickers and President’s Club eligibility of a sales plan.

The limit, in his view, is tooling. Companies “hamstrung on excel based systems” avoid complex plans because such plans are very difficult to build in spreadsheets. Customers with a system built for it, he said, pay incentives to “almost a 100% of the population including receptionists at the front desk.”

About $96 million raised before the 2015 IPO

Asked how much capital went into Xactly up to the IPO, not counting money raised in the offering itself, Cabrera said: “It was like 96,000,000.” The IPO, he said, was in 2015. Latka then asked for Xactly’s ARR-to-funding ratio at that point. Cabrera answered with a ratio, not a revenue number: “It was just very close to one to one, a little less.”

The public record sits alongside those answers rather than against them. Xactly’s IPO prospectus shows $83.0 million of convertible preferred stock on the balance sheet at January 31, 2015, and describes term loans and credit lines from Silicon Valley Bank and Wellington. A question about how the company was capitalized can take in that debt as well as the equity, so his round number and the filing need not conflict. The filings cannot check the ratio, because Xactly reported revenue, not ARR. For reference, total revenue in the fiscal year to January 31, 2015, the last full year before the listing, was $61.1 million.

Xactly’s IPO and the Vista take-private

The prospectus is dated June 25, 2015. Xactly sold 6,853,500 new shares at $8.00, which the prospectus put at $51.0 million to the company before expenses, and listed on the NYSE as XTLY.

Two years later it went the other way. On May 30, 2017, Xactly announced that Vista Equity Partners would buy it for $15.65 a share in cash, “a total value of approximately $564 million” and about a 17% premium to the May 26 closing price. That was just under twice the IPO price. The deal closed on July 31, 2017, and the shares stopped trading on the NYSE. The completion announcement, filed with the SEC that day, quoted Cabrera as “founder and CEO of Xactly,” the role he still held when he spoke to Latka.

Cabrera did not discuss the price in the interview. He explained the move private in terms of what Vista wanted him to build:

… it was part of the reason we took the company private was you know they sort of said, we believe in your vision, we want you to go from an ICM company just handling sales comp to an SPM company which is sales comp and all the surrounding areas like territory management and sales planning and on and on.

ICM is incentive compensation management; SPM is sales performance management, the wider suite. Vista’s message, as he relayed it, was to “go find those companies that can build up the story that you’ve been wanting to tell.”

Xactly revenue: what the filings show, and what the interview doesn’t say

Source: Xactly’s annual report on Form 10-K for the fiscal year ended January 31, 2017, consolidated statements of operations. US dollars, rounded to the nearest $0.1 million.

Those are the last revenue figures on the public record, because Xactly’s SEC reporting ended with the take-private. In the 2019 interview Cabrera gave no revenue, ARR or MRR figure at all. The episode’s YouTube title calls Xactly “$288m ARR Now” with “Plans To Hit $500m.” Neither number is said in the conversation. The only 500s on the tape are the Denver headcount he expected and the early customers’ sales teams of 300, 400 or 500 people.

What Vista changed, in Cabrera’s words

The acquisitions came first. “We’ve done three acquisitions in the last fifteen months which is allowing us to sell a lot more products, which is getting our ASPs going much higher,” he said. Xactly had also closed “the largest initial deal we’ve ever done in fourteen year history” the month before. He gave no dollar figure and declined to name the customer.

He did not name the three companies either. Xactly’s own company timeline lists acquisitions of mapping software for sales territories (filed under 2017–2018), Obero, a sales performance management company (2018), and an AI-based sales resource and capacity-planning business (2018–2019). The timeline gives years rather than months, so it cannot be matched exactly to his fifteen-month count, but the products line up with the territory and planning areas Vista had pointed him toward.

The point of the new products was the installed base:

… we have 1,600 customers now all over the globe, we’re able to go back to them and upsell, cross sell all these different products now that we have. Whereas before, we were kind of fairly much a one trick pony, we had comp and that was sort of it.

Retention: well north of 100%, not 140%

Latka asked how much the customers signed a year earlier were expanding from year one to year two. Cabrera’s answer: “It’s well north of 100%, know I don’t know the exact number because it does bounce around depending on whether it’s SMB or mid market or enterprise.” Products bought in the previous fifteen months were producing a double-digit percentage of new bookings, he said, and those sales were cross-sells into existing customers. His wording ran two different figures together, so no precise share is given here.

Latka then asked about 140% net revenue retention across the whole base. Cabrera: “Probably not that high. No.” The 140% is Latka’s number; Cabrera’s is “well north of 100%” for one cohort. Asked whether more acquisitions and cross-selling could get the base there, he said he thought so. That is a hope, not a result.

A Denver hub

Asked for the first changes that Vista helped him see, he named consolidation:

… we had offices all over the place, we had people all over the place, and we sort of said let’s create a center of excellence in Denver where we already had a small footprint, had about 75 people in Denver. You know, just two years later now we have 350 people in Denver on its way shortly to 500.

The 500 was a target, not a headcount. Xactly still had “a lot of offices elsewhere,” he said, but he called the center of excellence “a Vista initiated program which I think has been great.”

Longer contracts with built-in increases

Asked whether Xactly did anything counterintuitive, he pointed to contract terms:

… we used to sign three year deals and during the three year deals there was no increases annually. And one of the things we decided to do was go with over five or seven year deals and have annual increases every single year in the contract. It certainly seemed counterintuitive, we thought we would get tremendous push back.

Instead, he said, “it’s proven out to be a great thing for us in our business and our customers like it as they’re locking in.” Customers liked the longer term and the chance to buy the additional products.

Since the interview

On December 19, 2023, Xactly announced that Arnab Mishra had been named chief executive. Mishra had joined in 2017 as SVP of products and most recently served as chief operating officer. The release said Cabrera, “who has served as CEO since founding the company in 2005,” had announced his intention to retire in September 2023 and would stay on the board. Xactly’s own timeline files the handover under 2024. The company now describes its product as the “Intelligent Revenue Platform that unifies territory, quota, incentives, and forecasting,” close to the sales performance management suite Cabrera described Vista backing in 2019.