Posted on Monday, Mar 12th 2018
According to Gartner, the market for configure, price, and quote (CPQ) software was worth about $878 million in 2016 and is expected to grow 20% per year through 2020. Billion Dollar Unicorn Apttus is a leading player in the space that is expected to go public soon.
Apttus was founded in 2006 by Kirk Krappe, Neehar Giri, and Nathan Krishnan. It was initially a cloud-based contract lifecycle management software company, and it later evolved into a CPQ solution to help companies manage and personalize their sales contracts. Apttus was initially bootstrapped by building on Salesforce.com’s Force.com platform. It was particularly successful with overseas users and within a couple of years, shot to $5 million in revenue.
Today, it is the leader provider of Quote-to-Cash (QTC) and Contract Lifecycle Management (CLM) solutions. Its solutions help improve revenues for organizations through its QTC, CPQ, Contract Management, E-Commerce, and Revenue Management software solutions. Its hybrid cloud platform Apttus Intelligent Cloud utilizes technologies from Salesforce, Microsoft, and IBM. Its Intelligent Middle Office platform allows enterprises to automate and optimize revenue and commercial relationship management processes. Its Applied Artificial Intelligence offering Max enables enterprises to achieve superior business outcomes.
Apttus was bootstrapped initially for seven years and generated multi-million dollars in revenues. It does not disclose details of its financials but analysts estimate that the company earned $150 million in revenues in 2016.
It first raised venture funding in 2013 and since then has raised $404 million from investors including Gulf Islamic Investments, Kuwait Investment Authority, Salesforce Ventures, Iconiq Capital, IBM, PremjiInvest, and K1 Capital. In September 2017, it raised $55 million at an estimated valuation of $1.75 billion. In an earlier round in September 2016, it had raised $88 million at a valuation of over $1.3 billion. Last month, Apttus received $75 million in growth financing from Golub Capital.
Competition has been on the rise with acquisitions from tech giants. Oracle acquired BigMachines back in 2013 for an estimated $400 million. At the time of the acquisition, BigMachines was trending at an annual revenue rate of just under $60 million. Salesforce acquired SteelBrick in December 2015 for an estimated $360 million. At the time of the acquisition, SteelBrick was earning annual revenues of $10 million-$25 million. Now, SAP is the latest entrant with the $2.4 billion acquisition of CallidusCloud, which had revenue of $198.2 million in 2017.
The Salesforce acquisition was a blow to Apttus as it had been building its offerings on the Salesforce cloud. But Apttus diversified and built its virtual agent Max on Microsoft’s Azure components instead. Max allows sales teams to log Apttus activities hands-free through speech and then automates processes that would have taken manual and repetitive data entry during a contract’s closing. It also logs into Apttus’s machine learning capabilities to help set accurate quotes and suggest optimal discounts. Some of its features include voice-controlled capabilities, chat-based features, including Slack, Skype, and Facebook Messenger along with its own chat capability called Apttus Max Chat and an augmented reality functionality.
Questions for the Board
Apttus was reportedly working with Goldman Sachs on its IPO plans but with the latest financing round from Golub Capital, would Apttus still take the plunge?
Given all the major potential acquirers have already laced their bets, it is perhaps time Apttus made use of its unprecedented opportunity and made some acquisitions itself with the idea that it will need to remain independent and grow into a successful public company.
The SaaS market is a healthy, robust, exciting cauldron of innovation. For example, in our 1Mby1M roundtables, we came across a small company from India called Vaultedge that applies AI to contract evaluation. [You can listen to the recording here.] It would be an excellent acquisition for Apttus. This is directly related to their core emphasis on contracts.
Apttus also needs to decide what is the narrative beyond CPQ that the company will build its bigger strategy around. Is it going to go into CRM? Compensation? What is the company’s larger story if it were to remain independent?
This segment is a part in the series : Billion Dollar Unicorns
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