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Automattic Wants to Take-Over the Web

Posted on Wednesday, May 14th 2014

The interest in social blog sites, along with their valuations, has been growing rapidly. Last year, Yahoo acquired social blog site Tumblr for a whopping $1.16 billion. More recently, Automattic, the company that powers WordPress.com raised funds at a valuation of $1.16 billion as well. Here is a brief overview of how they have done so far.

Automattic’s Offerings
San-Francisco-based Automattic was founded in 2005 by Matthew Mullenweg to offer online blogging services to the masses. Today, Automattic is driven by the mission of wanting to make the Web a better place. Their offerings include the very popular blogging platform WordPress.com along with several other web publishing services such as the enterprise service WordPress.com VIP, backup and security service VaultPress, and HD video service VideoPress.

Automattic operates on a freemium model. While their basic services are mostly available for free, additional features are available at a subscription charge. Their open service WordPress platform is used in sites like WordPress.com which is among the safest and simplest way for individuals and organizations to enter the web. WordPress subscribers can use the site to publish for free. Premium features such as the ability to embed video content through their VideoPress platform, enhanced levels of customer support and unlimited blog space are available at a premium price of $299 per year. For larger enterprise customers, Automattic offers WordPress.com VIP, which lets organizations opt for cloud hosting of large scale websites at charges starting at $5,000 per month. WordPress.com VIP integrates the benefits of WordPress.com with the ability to custom code, thus transforming to an enterprise level content management system.

Today, more than 14 billion pages on WordPress.com are viewed every month by over 409 million people worldwide. WordPress’s blogging community produces more than 41 million new posts each month which generate over 54.1 million comments monthly. Their enterprise customers includes names like TechCrunch, TED, and CNN to name a few.

Automattic recently announced their plans to power a majority of the websites on the Internet. In an interview, founder and now CEO Mr. Mullenweg noted that he wanted “WordPress to be the best publishing platform in the world, bar none, including the best interface, authoring environment, and design tools.” As per W3Techs usage statistics, Automattic’s WordPress now powers 22% of the world’s websites compared with 19% in September last year.

They are fueling these efforts through acquisition. Last September, they announced the acquisition of file-sharing service Cloudup for an undisclosed sum. Automattic leveraged the acquisition to improve their media sharing and co-editing capabilities on WordPress.com. Last month, they also announced the acquisition of blog discovery app Longreads for an undisclosed sum. Longreads helps users discover blogs and news that they would like to read.

Automattic’s Financials
Automattic earns most of their revenues through subscription services for their premium options. They have kept their latest financials under wraps, but back in 2012, they were projecting to generate annual revenues of $45 million. They were already profitable. Till date, Automattic has raised $317.30 million in funding from investors including Insight Venture Partners, Chris Sacca, True Ventures, Tiger Global Management, Iconiq Capital, Polaris Partners, Radar Partners, New York Times, Shelby Bonnie, Blacksmith Capital, CNET Networks, Doug Mackenzie, and Kevin Compton. Their latest round of funding was held earlier this month, when they raised $160 million in a round led by Insight Venture Partners, Chris Sacca, True Ventures, Tiger Global Management, and Iconiq Capital at a valuation of $1.16 billion. They plan to use these funds toward business and market expansion. They believe that they are doing well financials and are not looking for an IPO.

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