Notes from the Xactly S-1 IPO Filing

Xactly, a sales performance and incentive management SaaS company, just filed their S-1 to go public. Over the years, I’ve seen Xactly’s booth many times at the Salesforce.com Dreamforce show but didn’t know too much about the company. After reading the S-1, it’s clear that there’s a big growth opportunity using software to manage commissions for sales reps and other incentive programs.

Here are a few notes from the Xactly S-1 IPO filing:

  • Company offering: solutions that help executives design, manage and analyze incentive programs and provide visibility into employee and incentive program performance. Employees use the solutions to monitor, estimate and track their own and their team’s performance in real-time, and modify their behaviors to maximize their payout consistent with company goals. (pg. 1)
  • 725 customers (pg. 2)
  • Revenues (pg. 2)
    2013 – $36.3 million
    2014 – $47.2 million
    2015 – $61.1 million (average of $84,275/year/customer)
  • Losses (pg. 2)
    2013 – $9.4 million
    2014 – $14.5 million
    2015 – $18.5 million
  • Replaces spreadsheets and integrates with customer relationship management (CRM), configure price quote (CPQ), human capital management (HCM), supply chain management (SCM) and enterprise resource planning (ERP) applications. (pg. 2)
  • According to IDC, the worldwide SaaS and cloud software market reached $39.3 billion in revenue in 2013, a 22.6% year-over-year growth rate, and will grow to $102.9 billion by 2018, at a compound annual growth rate of 21.3%, compared to an expected compound annual growth rate of 6.3% for the broader software market for the same time period. (pg. 2)
  • Only 12.7% of companies using a commercial incentive compensation management system as their primary method in 2014. (pg. 3)
  • 14 million people in sales and related occupations in the United States (pg. 3)
  • Average revenue per user of $280/year (pg. 3)
  • 28% of subscribers are outside of the United States (pg. 5)
  • Founded in March of 2005 (pg. 6)
  • Professional services revenue (pg. 9)
    2013 – $8.8 million
    2014 – $11.3 million
    2015 – $13.8 million
  • Accumulated deficit of $115.8 million. (pg. 12)
  • As of January 31, 2015, had approximately $198.7 million and $67.5 million of federal and state net operating loss carryforwards. (pg. 28)
  • Define enterprise customers as those customers with a minimum of 4,000 employees and mid-market customers as those customers with at least 350 and less than 4,000 employees. (pg. 49)
  • 104% revenue retention rate in the last 12 months (pg. 50)
  • As of January 31, 2015, had 333 employees, with 93 in research and development, 125 in sales and marketing, 86 in operations, customer support and professional services, and 29 in general and administrative. (pg. 88)
  • VCs own 67.4% of the company (pg. 113)
  • Founder/CEO owns 6.6% (pg. 113)

Xactly is a good representation of the major growth opportunity for SaaS: taking old-line business functions and building them from scratch in the cloud. By providing a better experience and delivery model, SaaS actually grows the size of the market. Look for Xactly to do well in their IPO and beyond, especially if they can keep their top-line growth above 30%.

What else? What are some more thoughts on the Xactly S-1 IPO filing?

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