It’s been a great week for venture-back companies filing to go public, especially in the SaaS category. After talking about Eloqua’s S-1 and Jive Software’s S-1, I want to talk about BazaarVoice’s S-1. BazaarVoice provides technologies to help companies manage user reviews and associated content like photos, videos, stories, etc. Think about what Amazon.com provides to build a community of content around their product listings, but now supply everything but the actual ecommerce engine and you end up with BazaarVoice (Amazon.com develops their own social commerce technology and doesn’t use BazaarVoice, but 587 other companies do use BazaarVoice).
Here are some notes from the BazaarVoice S-1 IPO filing:
- Revenues (pg 2):
2009 – $22.5 million
2010 – $38.6 million
2011 – $64.5 million (net loss of $20.1 million) - Estimate that there are 10,000 companies with at least $50 million in online revenues that can be served by the platform (pg 3)
- A team of people moderates content 24/7/365 in 27 different languages on behalf of clients (pg 4)
- Growth strategy: expand sales force, up-sell clients, greater customer insights, expand internationally, innovate with the platform, selective acquisitions and partnerships (pg 5)
- Accumulated deficit of $40.8 million (pg 5)
- Many potential clients are hesitant to use the software because they don’t want to display negative reviews about products or services (pg 11)
- Client retention rates ranged from 84.4% to 89.4% for 2009 to 2011 (pg 12)
- Largest 100 clients represent 57.3% of total revenue (pg 13)
- 494 full-time employees and 132 part-time content moderators (pg 15)
- Some product development, QA, and system operations are outsourced to Ukraine and Costa Rica (pg 19)
- Only consumed $11.1 million of capital since inception (raised $23.6 million) making them very capital efficient since they are able to use unearned income from clients pre-paying annually to fund the business (pg 42)
- 2008 cohort of new customers acquired represented $2.3 million in 2008 revenue and $17.4 million in 2011 revenue — extremely impressive up-selling (pg 43)
- $10 million line of credit (pg 57)
- VCs and investors own ~63% of the company (pg 124)
- Founder owns 14.3% (pg 124)
The BazaarVoice S-1 was straightforward and detailed without any surprises regarding their business model.
What else? What do you think of BazaarVoice’s S-1 IPO filing?
It appears in these two lines that they may have significant downward presure on their margins long term.
■A team of people moderates content 24/7/365 in 27 different languages on behalf of clients (pg 4)
■494 full-time employees and 132 part-time content moderators (pg 15)
It seems that as their client base grows, they will have to hire significantly more support staff. Makes me question if they are more human resources than software. Better yet, a Service as a Software company, instead of a Software as a Service company.