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You aren’t wrong. But keep in mind that these are all recurring revenue deals. The $400M is highly likely to recur next year or even increase - even if they don
by ttul 8y ago
You aren’t wrong. But keep in mind that these are all recurring revenue deals. The $400M is highly likely to recur next year or even increase - even if they don’t close a single additional customer.
SaaS companies talk about “lifetime value” which is a fancy name for the net present value of future cash flow from each customer. What if today’s $400M will recur for ten years? That warrants a value of $4B just on today’s customers. But if the growth can be sustained for a few more years, maybe by 2022 they’ll hit $1.5B/yr... that’s the gamble investors seem ready to take.
- IanCal 8y agoI can see them making money, I'm more shocked at the cost of running or building it up. I try to assume that if I think something is odd but it's not my field, I'm wrong and don't understand it properly. It's just at a scale I find hard to understand. A billion dollars is a lot. I'd love to know what it is they're pumping the money into that they make per user, because I can't see what massive upcoming things there are to build. What are they ploughing hundreds of millions into? Again, with all of this, I assume it's me that doesn't understand.
- ttul 8y agoWhen you start selling into very large enterprise, there are enormous behind-the-scenes requirements that are very expensive to develop. Compliance features, for instance.