How Numerator Expected About $130M in 2018 Revenue With Over 2,000 Customers Led by Top CPG Brands (Interview with Dennis Moore)

Introduction and Background on Dennis Moore

Nathan Latka

00:01Hello everyone. My guest today is Dennis Moore. He is a husband, a father, studied statistics at Michigan, plays sports like golf and paddle tennis, and loves to use data to analyze things. Professionally, means using data to help CPG companies make better decisions and personally that means a love for poker and wagering. A company is called numerator.com. Dennis, are you ready to take us to the top?

Dennis Moore

00:22Sure am.

Nathan Latka

00:23Sure. Alright. Over the past over the past twelve months, how much money have you made playing poker?

Dennis Moore

00:26Oh jeez, probably negative something.

Nathan Latka

00:26Okay. So should we

00:29listen to you this interview or not?

Dennis Moore

00:31Not not if it's about poker advice, no.

What Numerator Does and Its Revenue Model

Nathan Latka

00:34Alright. What's Numerator do and what's your revenue model? How do you make money?

Dennis Moore

00:37Yeah. We collect information that big companies, CPG companies like Procter, Coke, Kraft, companies like that need to understand how advertising promotion and pricing are trending in their in their industries.

Data Inputs: The Consumer Panel and Receipt Apps

Nathan Latka

00:47Okay. So a couple questions on this. Obviously, your data is only going to the inputs you feed it and then how you use that data. So where... What are your inputs?

Dennis Moore

00:54So our probably our most important input is a panel of consumers. We have about 300,000 people in The United States who send us all of their receipts. So when they shop in a store they snap a picture of their receipt. When they shop online they've given us opt in permission to collect their email receipts either from their email box or out of their Amazon account.

Nathan Latka

01:10And is that direct or you've partnered with an app that is like a receipt imaging app and you

01:15take

Dennis Moore

01:15We that have our own app. So there's two apps, one's called Shoparoo and one's called Receipt Hog. Anyone can download them on the app store and it's very direct. It's actually an important point. Our relationship is very direct with the consumers. They know they are signing up to send us their receipts.

Nathan Latka

01:15Do you

01:29pay them for it?

Dennis Moore

01:29We pay them for it. One of one of the apps is charitable based. If you ever cut out the box tops off your cereal boxes when you're a kid for your school, so one of our apps donates money to schools every time you upload a receipt. In fact, we gave $750,000 to schools last year collecting receipts that way. The other one is gamified. There's another app that you know, if you're not charitably motivated, will give you

01:47some tokens and you can play a game, that sort thing.

Nathan Latka

01:49Oh interesting.

Dennis Moore

01:50Point is that people know what they're doing. It's not like we're sneaking the data away from them. It's... No.

Receipt Collection Volume and Panel Scale

Nathan Latka

01:54By the way, I think that's the future. Right? I I think if Facebook had a business model where they paid users some amount of cents, 10¢ to whatever a month for for all their data, we wouldn't have all these issues we're having now about you're collecting unwanted data. Right? So I love it. Okay. Good. Okay. I understand the data input now. And give me a sense of kind of the the velocity of that pipeline. How many

02:14receipts per month are you collecting?

Dennis Moore

02:16Oh my gosh. We collect about one out of every 500 receipts in the grocery stores across the country. So it's it's hundreds of thousands of receipts a day.

Nathan Latka

02:24Okay. Hundreds of thousands a day. But you don't know the number, like, for the... You don't know, like, last month, how many you got total?

Dennis Moore

02:28I don't know. I know I know we've... We crossed over 500,000,000 in our lifetime and are like in the four years we've been in business but I'd have to do that

Nathan Latka

02:28That's helpful. Okay.

02:35You said this is across 400,000 users?

Dennis Moore

02:37Correct.

How Numerator Adds Value for CPG Brands

Nathan Latka

02:38Okay. That's great. Okay. Now let's go the next step. So how do you then make... How do you add utility value to the data to get CPG brands to pay you?

Dennis Moore

02:46Yeah. So the the main thing is in in sort of measurements of market share. So if you think about loyalty data, so think about a retailer for instance. A retailer knows a lot about who shops in their store, The loyalty card gives on, but they don't know what those people buy when they're in another store

Nathan Latka

02:46Sure.

Dennis Moore

02:46And that's actually pretty important. That's my poker analogy. It's like you you don't know what the other guy's holding. That's

03:06the important that's the important fact. Similarly with the manufacturers, what's going on is because the retail landscape has changed so much in the last few years. It used to be if you knew what you sold in grocery stores, you knew most of your sales. But now people buy online, they buy in Ulta and Sephora and Dollar Shave Club. And just like the way that CPG products get sold is so vast that you need sort of a

03:26wide range of consumer data to kind of track all the sales. So that's the primary value we have is really measuring the full omni channel from physical store to online store.

SaaS vs Professional Services Revenue Mix

Nathan Latka

03:33And is this a SaaS product for CPG brands or pay per line of data or what?

Dennis Moore

03:37It's a little of both. I mean, there's... It's a SaaS based model, there's also a services component. So People would sign up for a subscription and they can access their own data and do a lot of their own reporting. But there's also times when the business use case is a little bit more involved and the client wants, in addition to the subscription, they want some professional services help and we provide both.

Nathan Latka

03:55Over the past twelve months, if your whole revenue pie is a 100%, what percentage was professional services versus SaaS?

Dennis Moore

04:02Probably about... It's about probably about a third of the panel business. The panel business itself is about half. It's probably somewhere in the order of 20% of our revenue is probably services.

Nathan Latka

04:11Okay. Not not not not crazy, especially if it has some retention on the SaaS product.

Dennis Moore

04:15Yeah. This... We generally speaking, we try and provide like one, person's worth of service for every million dollars of stuff you buy from us.

Average Contract Value and Customer Economics

Nathan Latka

04:24That's pretty good. And then... Okay. So let's just focus on the SaaS company today. So so I'm sure you have a bunch of different cohorts, but I'm gonna force you into an average here just because we're short on time. So what's the average customer pay you per month or per year would you say?

Dennis Moore

04:36Per year is probably high 5 figures, probably like 75. I'm guessing a little bit but it is a brand average but yeah, it's probably it's probably a high 5 figure annual subscription.

Company History: Acquisitions and Vista Equity

Nathan Latka

04:45Okay. Got it. So so call it $75,000 a year or maybe around 60, you know, $6,200 per month, something like that. And put this on a timeline for us Dennis before we get too deep here. When did you launch the company? What year?

Dennis Moore

04:55Well, the company is really a concatenation of about 12 different acquisitions. So I'm... And to be clear, I'm not the founder of you know, I'm I'm sort of the PE CEO of the accumulated companies. But the panel business that we've been talking most about, that business started in 2014 and has grown from you know, just it's a panel business so it take the first year you don't make any money because you...

Nathan Latka

05:15That is numerator.com though, right?

Dennis Moore

05:16Yeah, yeah, yeah, yeah. The panel... That numerator.com, yeah, the most... The business we've been talking about is like is is a subset of numerator. Correct?

Nathan Latka

05:23Yeah. Yeah. And... Okay. So hold on. So I wanna understand kinda... Were you at the private equity firm that then went and bought Market Track and InfoScout or you were at one of those companies and basically moved up the chain after the roll up happened?

Dennis Moore

05:35Yeah. I kinda joined in the middle. So I joined when we had a previous private equity owner and we owned several of the businesses that make up the current numerator. I joined, we then sold to our current owners Vista Equity Partners and shortly after Vista acquired us, we made a very big acquisition in this panel based company. So

05:52I've

Nathan Latka

05:52Yeah. That's interesting.

Dennis Moore

05:53Some of the acquisitions and then and with both the one owner back and the current owner.

Nathan Latka

05:57Yeah. So so one thing I have to ask you because I think private equity firms, a lot of people don't really dive into strategy here, but there are so many synergies a company like Vista can do that other people just don't even think about. For example, they also are owners in Return Path. Return Path has a ton of data. I imagine your receipt data is also very interesting to Return Path. Inside of a big private equity giant when when

06:15when you know Robert puts you, right, and Return Path in the same room and says figure out how to work together. I mean, how do you... And he's kinda saying like, definitely figure out a way to work together. How do you make that work?

Dennis Moore

06:25Yeah. You know, well, in fact, I think we actually do quite a bit of that and I I I can't speak for other private... I think Vista is actually probably ahead of the curve in terms of doing more of that because most of the companies Vista acquires have sort of that tech enablement or SaaS synergy, so there's more in common. So we actually do... Return Path is actually no longer part of the portfolio of Vista, but we

06:44would have done something with them. But there are two other Vista companies that we talk a bit... Partner with quite a bit. One is called Mediaocean.

Nathan Latka

06:51Yep.

Dennis Moore

06:52That's a lot of data on the advertising.

Nathan Latka

06:53Bill Wise, great guy. Yeah.

Dennis Moore

06:54Bill Wise. Yeah. Bill's in fact on our board. So that's another

06:56one

Nathan Latka

06:56Oh, he was on the show a couple weeks ago.

Dennis Moore

07:00He had a baby earlier this week. Yeah. And then Integral Ad Science. So...

Nathan Latka

07:06Don't know them.

Dennis Moore

07:07Go by IAS. They compete against Moat and DoubleVerify, but all of... They collect both Mediaocean and IAS have a lot of information around how advertising hits consumers, which you merge it up with our data, can start to draw the connection between consumers being exposed to ads and do we or do we not see a change in the lift of their own volume.

Nathan Latka

07:25Interesting. Okay. So, So when... What year did you join the company like at all? Any other parts?

Dennis Moore

07:32So I joined the company in the summer of twenty sixteen.

Nathan Latka

07:32Okay.

07:36So kind of two years....

Dennis Moore

07:37Capital. It was about... And then we sold the company to Vista in the spring of seventeen.

Nathan Latka

07:42Okay. '20... Was it public what the acquisition price was?

Dennis Moore

07:44No. It was not.

Nathan Latka

07:45It was private. Okay. Alright. Good. Okay. So 2014, Aurora, you joined '20...

Dennis Moore

07:492016.

Revenue Scale and Growth: $130M Projected in 2018

Nathan Latka

07:50'20... Yeah. Yeah. 2014, sorry, launched. 2016 Yeah. Aurora sells to to Vista. You stay on. You're now leading kind of the conglomerate. And then so walk me through kind of where you're at today. So over the past couple of years, what have you scaled to in terms of total customers you're serving?

Dennis Moore

08:04Yeah. So we over 2,000 customers and we're probably gonna hit about 130,000,000 of revenue this year across all of combined companies. And really the driving force for all that is the channel fragmentation. Traditional CPG companies, they traditionally rely on Nielsen, which is a company I worked at for a long time, IRI, those are like the traditional places they got data on the market. But as the market has moved to this kind of amorphous mass between brick

08:32and mortar and online, they need some new sources of information. That's kind of like the the spot that we really dig in and say that there are new things in the market that aren't being well measured and we're measuring them better and that's kind of our pitch.

Nathan Latka

08:43Yep. So one thirty run rate today, help me understand growth a year ago where we at November 2017.

Dennis Moore

08:48We're just over a 100.

Nathan Latka

08:48Just over a 100.

Expansion Revenue From Existing Clients

Nathan Latka

08:51Okay. So pretty healthy growth. Now is most that... This kind of 30,000,000 in kind of new bookings you've driven over the past twelve months, what percent of that has come from expansion versus totally new customer ads?

Dennis Moore

09:02Yeah. I mean, most of it is from expansion in the sense that we had multiple... You know, we had these multiple companies we've tied together and so we might start to sell the new service to a company that was already buying something else from us.

Nathan Latka

09:02Yep.

Dennis Moore

09:02You know, so I would say it's it's... So it's expansion but it has an element of new business because of the company... To the client who's buying, it's a brand new

09:26service from us.

Nathan Latka

09:26Yep. That's interesting. So someone that signs up, I'm gonna use easy numbers here. Someone that signs up for your product brand new today for a $100,000 a year, $100,000 ACV. Typically, when you put them through this well oiled system you've built, what will that expand to in year two?

Dennis Moore

09:42I think on average, we'd say somewhere like one thirty, you know, like a something like that. If it if, you know, it can... What it tends to be is a little bit lumpy though because what can happen is there are certain services that if they, you know, if they expand to it, they might double or triple their revenue. Right? And then there are other services where they just sort of make a marginal expansion by maybe expanding

10:05the box of data a little bit, know.

Nathan Latka

10:05Yep.

Gross Revenue Churn and Cohort Analysis

Nathan Latka

10:07And let's let's stay on kind of this line for a second which is kind of cohort analysis. So that same cohort you know a year from today, it sounds like there's some expansion maybe average 30% expansion. Let's talk about the flip side of that, gross revenue churn. What's gross revenue churn on that cohort?

Dennis Moore

10:19Yeah, churn is probably... We're kinda coming in the upper 80s or our net retention rate is probably just shy of 90 so in the mid to upper 80s right now. There's one line of business that we have where we collect data by scraping data off the web, sort of price information and other and that tends to be a business line that there's just a lot of people doing that space right now and so we do have

10:42a little bit more churn on that side of our business than we wish we had.

Nathan Latka

10:45So Dennis, I wanna make sure I understood that real quick. So you said net revenue retention is 90%?

Dennis Moore

10:50Yes. Correct.

Nathan Latka

10:51Okay. And so just to make... Be clear, if 30% is expansion, right, which means that's essentially, you know, so if I take 30% off the 90, I mean, I can basically say you guys are what churning what about how... I mean, it's a pretty significant amount of churn, gross revenue churn.

Dennis Moore

11:05Maybe maybe we're talking about a little bit differently. Mean, so I... When I'm talking about of all of all the bookings that I have, right, and I set price increases aside just, you know, how much of what I had last year do I keep? So about 10% of my base, I'm losing, but then of the 90 that stays, I'm expanding that. So my net... So so...

Nathan Latka

11:23I'm gonna say, your net retention is over.

Dennis Moore

11:26My growth my growth with my existing customers is larger than my net my my net... Than than the than the churn I'm losing.

Nathan Latka

11:32Yeah. Yeah. Okay. Okay. Just so let me let me say it again and see if we're... I I wanna make sure I'm interpreting your numbers accurately. You lose on a cohort that signed up a year ago, you'll lose maybe 10% of that revenue. You'll expand it though 30%. So net, you're 120 net revenue retention on that cohort.

Dennis Moore

11:48Correct.

Nathan Latka

11:49I got it. Very good.

Dennis Moore

11:50Yeah. That makes more sense.

Nathan Latka

11:51We have all these different metrics.

Dennis Moore

11:53I get confused when you include the price increases, don't include the price increases. Guys are talking about it.

Price Increases and Product Quality Improvements

Nathan Latka

11:57Yeah. I would include them. That's expansion revenue. Okay. But let let's dive deeper on that actually. When you do increase the price, what have you found is the most effective way to to get people comfortable paying that new price when they go, but Dennis, I want the grandfather plan. I was an early customer. I love you. You have great hair. Give me a discount.

Dennis Moore

12:12Yeah. Mostly mostly it's about improvements in the product. So like it's pretty good to say like the panel business We've taken that when we acquired the business a little over a year ago on the panel side, we had 75,000 people. We had 400,000 people in the panel but there's a subset that you draw to be your representative sample. That was 75,000. We've made it 100,000. We're going make it 125,000 in the next year and so there's

12:35quality improvement. We made the data larger so the number of issues that they can study and the number of things that they can read has increased. So that's a... It's kind of a classic quality place. So we can legitimately say that there's been enhancements in product quality that, you know, manifest themselves on a price increase.

Sales and Marketing Spend and CAC Payback

Nathan Latka

12:51Interesting. Talk to me about kind of dollar based CAC and the reason I ask is I've had a... I've had several kind of private equity owned companies on the show, and I found that this is a good actual idea to understand how fast kind of the SaaS marketplace is growing. So when I had Andre from Ping, which is also I believe part of Vista...

Dennis Moore

13:11The Vista... Yeah. Vista... Just CEO as well. Sure.

Nathan Latka

13:13Yeah. Ping Identity. I mean, he articulated to me that kinda... They're currently... He's currently paying about a dollar 20 to get a new dollar in ARR. And that they're actively and aggressively trying to figure out actually how to spend more because they have so much confidence in their lifetime value. Where's your head at in your business?

Dennis Moore

13:28Yeah. I mean, know we're not as we're not as extreme as that. We spend about 20... Our total cost of sales and marketing is about 25% of our total revenue. Right? So we're a lot of money every year on our sales force and our marketing efforts. But we're not in a situation where we're spending more than the first year's revenue just to acquire a customer.

Nathan Latka

13:51Got it.

Dennis Moore

13:51And I think the thing that's different about our business and some of this, you know, we have we have like over 2,000 clients. We have lots of clients that spend 20,000, 30,000, 40,000, $50,000 a year with us.

Nathan Latka

13:51Yep.

Dennis Moore

13:51So the the lifetime value is large and the renewals are important, but it's not like it's not as if these are 7 figure deals that you would spend, you know, an enormous amount of money to win because they're

14:11maybe 8 and 9 figure lifetime values. Yeah. It's a little bit more wider range of clients.

Nathan Latka

14:16So just to repeat that back to you, you're spending maximum a dollar of CAC to get a new dollar of ARR at twelve month pay... Said differently, it's about a twelve... Less than a twelve month payback period. And in terms of just total macro level, you're spending 25% of your total revenue which is about a $130,000,000 today on sales and marketing.

Dennis Moore

14:33Correct. You got it.

Team Structure and Sales Force Composition

Nathan Latka

14:34And how... And and so let me understand more about the team. What's the team size today?

Dennis Moore

14:39Well, team... Worldwide, we have 1,500 associates. Although, 700 of them are in offshore capacities because we have a lot of data handling, data coding, data entry sort of issues. But in terms of say client facing folks, we have about just under a 100 commercial sales folks and about another 75 services based consultants and services folks.

Nathan Latka

15:03And talk to me about the process. Talk

Dennis Moore

15:05to And me there's a very lot...

Nathan Latka

15:06What's... Mhmm. Go ahead.

Dennis Moore

15:07No, was just... I didn't say anything about the engineering team too. That's the other big pocket of staff that we have is a large number of engineers. All of our businesses... I'll just continue to use the receipt business as an example. And I say that someone takes a picture of a receipt, we know what's on it. As you can imagine, there's actually quite a bit more

15:24to it than that in terms of the OCR required to turn that image into actual data.

Nathan Latka

15:29That's right. Yeah. Break down that kind of machine for me here for a second. So I want to understand the sales machine you mentioned about, I think you said 75 professional services, a 100 commercial sales. What's the ratio between kind of SDRs and AEs? How do you use customer success and onboarding reps in that equation?

Dennis Moore

15:44Yeah.

15:48Would say generally speaking we're rooted in more of the enterprise sales level because our biggest clients, our... But the 50 largest CPG clients, P&G, Coke, Nestle, Unilever, those are like where those are where our bread is really buttered and so we have a lot of a very tenured staff focused on those accounts. We do have an SMB market. We do have a lead gen team kind of chasing the mid and the smaller market, but

16:13in terms of dollar expenditures, we're probably top weighted a little bit more than, other companies of our size.

Post-Acquisition Changes: Systems and Go-to-Market

Nathan Latka

16:18Okay. Interesting. When Vista acquired you guys, first change that you guys decided to make together was what?

Dennis Moore

16:25Internal systems. We had... I think we had six instances of Salesforce. We had three different accounting systems because we had concatenated all these small acquisitions before and Vista just kind of looked at it and said, This is kind of ridiculous. We need to get on one instance of Salesforce. That instance, that needs to be the system of record for all of the things related to clients and that needs to tie in one time to our accounting

16:45system. So we spent a good... Gosh, we spent probably close to six months just kinda getting all of that straightened out so that we now can go from from quote to order to bookings all in one system. But that was that was not easy.

Nathan Latka

16:58Yeah. Okay. So systems optimization is number one and what would you say that was... I would say that's very tactical. What would you say is the first like big strategic change that happened? Was it a price increase or something else?

Dennis Moore

17:08No. It was it was in the go to market team. We we had again again still some remnants of we had a very product focused sale. You know, people who came to us selling one of the products and we would buy another company with people who sold that product and the obvious opportunity was to have a united sales force and sort of bring the whole bag to clients and start to integrate services together. We had to

17:30do a lot of work to essentially take a fractured sales force and align it up into sort of one go to market, which then following on that heels, they're kind of in parallel with that also meant certain things we had to do with the product to make sure that the product experience was truly integrated. But the products were somewhat easier to integrate, I'd say that the sales forces were further behind, so we took on the sales

17:49force first.

Nathan Latka

17:50That's interesting. Yeah. So basically what you're saying is every sales rep knows all the things they could potentially sell, they can recommend better packaging, and get more, you know, wallet share, etcetera. Yep. That's that's...

Dennis Moore

17:59You know, and like a typical, you've got a you've got a portfolio of products. I mean, they're all differentiated in certain ways, some are more differentiated than others. And so by integrating, you kind of take the the equity and the differentiation of your best products and you kind of give a little bit of lift to say to your more your more your more commoditized products.

Famous Five Rapid Fire Questions

Nathan Latka

18:17Yep. Very very good, Dennis. I was enjoying this. Just realized we ran out of time. Let's wrap up quickly with the famous five. One word answers if you can. What's the last business book you read?

Dennis Moore

18:25I don't read business books.

Nathan Latka

18:26Okay. That's a no. Number two, name name under the radar CEO that you really respect or you're learning from.

Dennis Moore

18:33Oh, that I'm learning from. Bill Wise.

Nathan Latka

18:36Bill Wise. That's a good one. Number three, what billing tool do you use?

Dennis Moore

18:40Billing tool? Oh my god, I don't know.

Nathan Latka

18:42You're not sure. Okay, name your favorite online tool for building your business.

Dennis Moore

18:46Oh geez, online tool man. You're stumping me man, I'm old school, I don't know.

Nathan Latka

18:51Alright. Number four, how many hours of sleep do get every night?

Dennis Moore

18:55Seven ish.

Nathan Latka

18:55Okay. That's good.

18:56And what's your situation? Married, single, kiddos?

Dennis Moore

18:58Married, two kids, one in college, one in high school.

Nathan Latka

19:00Oh, great. And how old are you?

Dennis Moore

19:02Be 50 in December, so 49 for now.

Nathan Latka

19:05That's exciting. Alright, Dennis. Take us home here. Last question. What do you wish your 20 year old self knew?

Dennis Moore

19:10Oh, what else? I wish my 20 year old self knew more about starting companies and smaller ventures. You know, I just... I I kinda thought you went to school, you got a job at a big company, and that's kinda how world worked, and it took me until I was 47 years old to discover private equity in smaller companies.

Nathan Latka

19:26Get in the starting the company game sooner coming from Dennis, now leading a company called Numerator about to pass a $130,000,000 in ARR. That's up from a $100,000,000 run rate just a year ago. So healthy growth owned by private equity firm Vista Equity. It passed 2,000 customers mainly all the big CPG guys. You know, average contract values call it $5.06, $7 per month. They're you know, not as aggressive as some other portfolio companies in terms of

19:49dollar based CAC spending up to a dollar to get a new dollar of ARR or about 25% of their total revenue on sales and marketing. First moves, again, bring efficiency to the sales team. One instance of Salesforce. That was what they did first two moves kinda after the Salesforce acquisition. Again, company launched in 2014. Team of about 1,500 today growing rapidly. Dennis, thanks for taking us to the top.

Dennis Moore

20:09Alright. Thanks, See you.