Xactly Went Public to Delete Its Own Preference Stack, Then Sold to Vista for $564M
Xactly's founder priced its IPO four dollars below what he wanted and sold to Vista two years later at double it. The reason he went public in the first place was the cap table.
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Chris Cabrera took Xactly public in 2015 at $8 a share, which was four dollars below what he wanted. Two years later he sold it to Vista Equity Partners at $16 a share — $564 million — and stayed to run it.
Ask him why he went public and the first reason is not the money.
The thesis. Cabrera used the IPO to delete his own cap table. Ten years of venture rounds had built a preference stack sitting ahead of common shareholders on any exit; going public converted everyone to common. The Vista deal three years later was the reverse trade — giving up quarterly scrutiny to buy the freedom to make acquisitions.
Getting fired into the idea
Cabrera was selling on-premise incentive compensation software when Salesforce told him they would not buy it.
Salesforce.com sort of pushed the nest and said, we’re not gonna buy this from you because it’s the wrong religion. It needs to be SaaS, it needs to be the cloud, the cloud is the future.
He tried to get his employer to embrace it, unsuccessfully. “We might have had some bad words that ended in me getting fired.” He went into Christmas 2004 without a job, eight years of compensation experience, and Salesforce saying that if he built it they would come. Xactly was founded on 1 March 2005; Salesforce became its first customer, an investor, and its longest-standing account.
What the product does to a sales rep
Xactly automates sales commissions — a category most of the world still runs on Excel. Cabrera frames the scale of the problem in dollars: a company paying 200 salespeople might be running a $20 million cost centre through spreadsheets.
But he does not sell it as a reporting tool. He sells it as a behavioural one.
The idea that you can log into Salesforce and be seeing the deal you’re working on and have a little button that says, if I sell this deal, this is how much commission I’m gonna earn. You can begin to think about the ways that you can drive behaviour.
The pricing is about $30 per rep per month. The customer base is deliberately horizontal: LinkedIn and Salesforce pay for their entire sales forces, but so do wedding planners at Hyatt, bank tellers earning a spiff for walking a depositor ten feet to a loan officer, and thousands of people at the Australian post office.
The number he stopped giving
Latka multiplies the seat count by the price and arrives at roughly $16.8 million a month. Cabrera says he is “in the right ballpark” and then immediately redirects to what is actually on the record: the company was north of $100 million of ARR when Vista bought it in July 2017, and as a private company it no longer discusses revenue.
Those two figures do not reconcile, and neither do the dated rows that follow them. The GetLatka profile carries $95.5M for mid-2017, then $201.6M for the date of this conversation — which is exactly what Latka’s arithmetic produces, and is now flagged an estimate for that reason — then $155M in early 2019 and $288M that July. A ladder that goes up, down, and up again is the shape of a company that stopped reporting, being modelled from the outside.
What Cabrera does give directly: revenue in the “high 60s, 70s” before the IPO, and roughly one-to-one revenue against capital raised at that point.
Going public to kill the preference stack
There were three reasons for the IPO and Cabrera ranks them himself. The bucket-list one he admits to: “I wanted to do it and nobody could talk me out of it,” despite CEOs warning him it was a nightmare. The $55 million net was real and useful. But the one he keeps returning to is structural.
Even though we hadn’t raised tons and tons of money, we certainly had a pretty big overhang of preference that the VCs would get off the top of an acquisition. Everybody goes to common and we’re all now on the same — no liquidation, no ratchet clauses, no nothing. Everything goes away.
He adds the reason underneath the reason: “I just personally never liked the concept of preference. I always felt like it was unfair.”
- 2005 · Founded $800K of angel money, then a $4M round that year, then $8M, then $12M — $86M in total before the IPO.
- 2015 · IPO Priced at $8 against a hoped-for $12; roughly $500M market cap; ~$60M raised, ~$50–55M net.
- July 2017 · Vista $16 a share, $564 million, on revenue north of $100M. Every early investor at least doubled.
On the IPO price he is candid about the moment: seven or eight other companies were going public in the same two-week window and three of them pulled. “There’s a moment there of, Jesus, did I do the wrong thing here.” In hindsight he calls it absolutely right — everyone who bought at $8 sold at $16.
Going private to buy things
Xactly was public for eight quarters and made its numbers in all eight. The problem was not performance.
Size matters as a public company. Wall Street doesn’t behave well around bumps, and you’re gonna have bumps in every business. We generally compete right now with SAP and IBM. We wanted to do some acquisitions, we wanted to grow in different parts of the world, we wanted to come out with some new products — all those things were very difficult to accomplish as a relatively small public company. I felt like we were operating with one hand tied behind our backs.
What made Vista attractive was that it was not a sale in the way it looked. “I wasn’t selling the company. I was really getting a whole new set of investors. I was still gonna run the company.” He describes Vista as a rich uncle, and notes they had first made contact roughly a year before; once re-engaged, the deal came together in weeks.
Latka observes that Vista’s deals always seem to land on a 7.2x ARR multiple. Cabrera does not confirm it: “I don’t know the exact multiple, but we did fine. We’re happy.”
What the rich uncle bought
Within seven months Xactly had made two acquisitions, both chosen to be sellable back into the existing 1,400 customers: AlignStar, a territory management product adjacent to compensation, and Obero, a Canadian competitor in incentive compensation management that brought ASC 606 revenue-recognition technology and sales planning — two things Xactly did not have.
By the following year the count was three acquisitions in fifteen months, and the effect had shown up in the numbers.
“Go from an ICM company just handling sales comp to an SPM company — sales comp and all the surrounding areas — and find those companies that can build up the story you’ve been wanting to tell.”
“Something like high double-digit teens percentage of our new bookings is coming from these new products that we’ve acquired in the last fifteen months.”
Asked about net revenue retention in 2019, he puts it well north of 100% and, pressed on whether it is above 140%, says probably not — but that he thinks the acquisitions can get it there.
Two changes he would not have made alone
The first was geographic. Xactly had people scattered across many offices; Vista pushed a centre of excellence in Denver, where they already had about 75 people.
Just two years later now we have 350 people in Denver, on its way shortly to 500. Getting everybody under the same roof working rather than just spread out all over the place — that centre of excellence approach was a Vista-initiated programme which I think has been great.
The second was contractual, and Cabrera calls it counter-intuitive. Xactly had signed three-year deals with no annual increases. They moved to five- and seven-year terms with an increase written into every year.
We thought we would get tremendous pushback, but in fact it’s proven out to be a great thing for us and our customers like it, because they’re locking in. That’s something I wouldn’t have foreseen a couple years ago.
Asked what he wishes his twenty-year-old self had known, the founder who spent a decade managing a preference stack does not mention equity at all.
I would tell him just stay the course, because I’m pretty happy with the way things turned out. I’d probably tell him obviously to buy Apple. And I would tell him to spend more time with my parents.
Sources Chris Cabrera’s interviews with Nathan Latka, recorded 26 February 2018 and 9 July 2019; revenue and funding rows from the GetLatka Xactly profile; IPO and acquisition figures as stated by Cabrera on the tapes.
