RevTrax Hit $10m in Revenue, He'd Sell "For $30m"

RevTrax is an 11 year old startup that helps big consumer brands, retailers, and CPG companies offer discounts in smarter ways to preserve their margins.

The company is flat year over year doing $10m in Revenues across 100 enterprise customers. I wanted to sit down with founder Jonathan Treiber to understand why growth is flat and what he might do to turn things around.

How do you charge?

RevTrax prices on a volume basis based off how many campaigns a CPG customer might want to launch in a given year.

Clients then commit to these usage tiers. If they go over, RevTrax bumps the customer up to the next plan on pro-rate basis. If they don’t use what they pay for, no refunds. Use it or lose it.

So what are brands committing to payment wise?

On average what do brands pay?

Customers pay Revtrax $100k per year on average. That customer would do 20-30 offers over course of year and send out about discounts to about 1m potential customers.

Today, RevTrax works directly with 100 corporate clients like Unilever across 600 of their brands. Going from 1 enterprise to 100 is tough, how’d Treiber do it?

How’d you get your first customer in 2008? Tough times!

Treiber and his tech co-founder bet each other on who would finish first: Trieber getting first customer, or co-founder finishing the code.

Both ended up finishing at the same time.

Treiber closed the marketing and merchandising head at CompUSA who needed help using digital marketing to drive in store sales with targeted and trackable offers.

After CompUSA, the first 10 customers were all 10 person marketing teams or less, doing between $200-500m in annual sales. This worked because these teams could move fast and be nimble.

RevTrax Revenue is $10m Today Across 100 Enterprise Customers

The company is doing $850k/mo today and has been flat year over year due “to macro-economic trends,” says Treiber.

The company has been capital efficient having only raised $1.6m in total equity capital to hit breakeven cash flow and $10m in ARR.
There are 35 employees at the company today: 6 in sales, 6 in client services, the rest are product and engineering.

$285k in revenue per employee is above average when compared to 1800 other private SaaS companies, but are their churn and CAC numbers healthy too?

What is RevTrax customer churn and CAC?

Churn was the biggest problem from RevTrax in its earlier years. Over the last several years, churn has gotten better. On a logo basis its about 20% annually. On a revenue basis, net revenue retention is 95%.

The company does not generate any growth from expanding accounts year over year. This is a large growth opportunity for RevTrax over the next 12-24 months. They’re adding new product lines and a new salesforce to land multinational clients.

RevTrax is at a 12-14 month payback period on new customers.

It’s tough to be aggressive driving growth at 12-14 month payback periods unless you get significant funding to bridge the cash gap.

With flat growth and unit economic strains, is now the time to acquire RevTrax at a discount?

Want to make a deal?

Treiber said he’d consider selling the company today if someone offered $30m, 3x current ARR. Potential fit for those of you in micro private equity.

If you’re an investor reading, Triber also said he’d “probably definitely” take a $5m investment for 12% of the company.That would value the company at about $50m, or a 5x multiple on $10m in current ARR. If you’re a smart SaaS CEO or investor, you might run this playbook after you invest to unlock value:

1. Hire 1-2 customer success reps, give them quota, and incent them to drive more usage on historical accounts so that you can expand accounts. Currently there is no expansion.
2. Figure out a mid-market tier/price point to open up top of funnel. Right now most contracts are in $100k ACV range.
3. Launch partnerships with enterprise CRM tools who would benefit from more contacts getting added via offers that RevTrax facilitates.

If you’re reading this and you end up doing a deal with Treiber, I get a 5% kicker. 🙂