Continuing with our analysis of Billion Dollar Unicorns, here is a digital advertising start-up Yext, which is yet to hit the billion dollar valuation mark. Its stellar performance does make it a potential Unicorn.
According to eMarketer, the global spending on ads on Internet-connected devices including desktops and mobile devices were estimated to grow 15% over the year to $137.53 billion in 2014. Digital ad spend was estimated to account for just over 25% of all paid media spending worldwide compared with 20% in 2012. Overall digital spending is expected to grow to $204.01 billion by the year 2018.
New York-based Yext was founded in 2006 by Howard Lerman, Brian Distelburger, and Brent Metz to offer local digital advertising services to businesses. Today Yext has become much more than just a digital Yellow Pages services. Since inception, Yext has been able to make significant progress in pay-per-call advertising, business listings synchronization, and local marketing cloud segments. Their platform helps small businesses and brands manage location data across more than 50 search engines, location mapping services, and on social media like Facebook. Through their tools, local businesses can make changes to a single source of information such as adding photos and media and those changes are updated to multiple digital sites that the business may have.
Additionally, their advanced analytics solutions provide metrics for each of the business listings in real-time. Businesses are able to select metrics to identify strategies that deliver results and track, assess, and adjust marketing activities for increased reach and impact.
Today they have customer listings of over 400,000 businesses and help make millions of monthly updates across more than 85 digital platforms.
Yext earns revenues through a subscription-based model. Prices vary from $149-$499 a year based on the number of websites and pages that a business wants to manage through their application. The company does not disclose detailed financials. Recent reports reveal that revenues have improved 62% over the year from $34 million in 2013 to over $55 million in 2014.
The company is venture funded so far with $115.8 million in investments from Sutter Hill Ventures, Institutional Venture Partners (IVP), Marker, Insight Venture Partners, WGI Group, CrunchFund, Michael Walrath, and the founders Brent Metz, Brian Distelburger, and Howard Lerman. Their last round of funding was held in June 2014, when they raised $50 million in a round led by Insight Venture Partners and participation from Marker, IVP, and Sutter Hill Ventures. The round valued them at $525 million. Back in 2012, Yext was valued at $270 million.
Yext plans to use the latest funds for international growth and to file for an IPO soon. As part of this move, they recently hired a new CFO Steven Cakebread who was instrumental in guiding Pandora and Salesforce.com to their IPO.
The funding has also helped them expand their presence in Europe. During the current year, Yext is looking to expand in the Asia Pacific region. Last December, Yext also announced the acquisition of InnerBalloons, a digital presence management company based in Netherlands for $8 million. InnerBalloons provides presence management for 15,000 Dutch businesses, leveraging which Yext will be able to expand their European operations.
It will take Yext another couple of years to reach the Unicorn valuation level of a billion dollars. Their growth rate is solid, but revenues are not doubling and tripling year-over-year. However, if they continue to execute well, there is a reasonable chance that a Unicorn is in the making.
More investigation and analysis of Unicorn companies can be found in my latest Entrepreneur Journeys book, Billion Dollar Unicorns. Unicorns will also be discussed with some special guests during our 1M/1M Roundtable programs over the next few weeks. To be a part of the conversation, please register here. The term Unicorn was coined in a TechCrunch article by Aileen Lee of Cowboy Ventures.
This segment is a part in the series : Unicorn In The Making