Notes from the MuleSoft S-1 IPO Filing

MuleSoft, a fast-growing data and application integration software provider, just released their S-1 IPO filing. As more companies move to the cloud, the demand for connecting these applications, and the legacy installed applications, has grown as well.

Here are a few notes on the MuleSoft S-1 IPO filing:

  • Key metrics as of December 31, 2016 (pg. 1)
    • > 1,000 customers
    • 117% dollar-based net retention
    • 70% revenue growth
    • $188 million in revenue
    • -1.4% operating cash flow margin
  • Customers use the Anypoint Platform to connect their applications, data, and devices into an “application network” in which these IT assets are pluggable using application programming interfaces, or APIs, instead of glued together with custom integration code. (pg. 1)
  • Estimate the current market opportunity to be $29 billion. (pg. 3)
  • 30 customers with over $1.0 million in annual contract value of subscription and support contracts. (pg. 3)
  • Revenue (pg. 3)
    • 2014 – $57.6 million
    • 2015 – $110.3 million
    • 2016 – $187.7 million
  • Net losses (pg. 3)
    • 2014 – $47.8 million
    • 2015 – $65.4 million,
    • 2016 – $49.6 million
  • Professional services revenue (pg. 8)
    • 2014 – $9.1 million
    • 2015 – $22.2 million
    • 2016 – $34.9 million
  • Accumulated deficit of $236.2 million as of December 31, 2016 (pg. 12)
  • In 2014, 2015, and 2016, total sales and marketing expense represented 102%, 84%, and 65% of revenue (pg. 15)
  • Outsource the cloud infrastructure to Amazon Web Services, or AWS, which hosts the platform (pg. 16)
  • Platform is deployed in a wide variety of technology environments, both on-premises and in the cloud (pg. 16)
  • 38% of the revenue from customers located outside the United States in 2016 (pg. 27)
  • 156 employees located in Argentina at the end of 2016 (pg. 29)
  • Ross Mason created Mule in 2006 to address the frustrations of manually connecting disparate systems and applications. Mule took its name from Ross’s desire to take the “donkey work” out of legacy approaches to technology integration. (pg. 57)
  • Annual contract value of $169,000 in 2016 (pg. 58)
  • Subscription pricing is based primarily on the amount of computing capacity on which the customers run the software (pg. 58)
  • Founder owns 5.9% (pg. 134)
  • VCs own 67.8% (pg. 134)

MuleSoft is a hybrid cloud and on-premise software provider with a pricing model that bills everything like SaaS. Data and application integration is a massive market and MuleSoft is well positioned to grow for many years and have a strong IPO. Like AppDynamics, look for large strategics to take an interest in MuleSoft as well.

One thought on “Notes from the MuleSoft S-1 IPO Filing

  1. What do you think they will price it at in terms of EV/revenue or any other metric?

    By looking at SAAS companies their valuations are vastly different for year over year growth of 56% to 70% and similar profit margin and trailing twelve month revenue.
    Here is kibana visualization for it (NewRelic, Cornerstone on demand and Zendesk fall into this group):
    http://54.67.56.44/goto/4dd07cabbfc8f3a28e0d5401a825be5e

    Looks like their EV/revenue most likely be in 9.5 and 13 range.

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