How Active Campaign Hit $200m Revenue, 185k Customers in 2024

In 2003, ActiveCampaign founder Jason VandeBoom found himself in court. Unlike most defendants that day, he wasn’t being fined for public urination. His case? Failure to obtain a license to do business in the city of Chicago. Today, ActiveCampaign revenue is around $200m in terms of annual run rate.

Here’s how they compare to their direct Newsletter competitors and the Omnichannel space they’re moving aggressively into:

The firm is betting big on Generative Artificial Intelligence.

Before we jump to today… lets look at how they got started.

First 100 Customers – A Microevent Strategy

VandeBoom studied fine arts at college in Chicago while working as a consultant building email marketing solutions for clients. His first products were on-premise systems – clients had to physically install hardware.

He quickly realized that switching to Software (SaaS) would be a better experience. In 2003, 19 year old VandeBoom launched ActiveCampaign.

VandeBoom got his first 100 customers by holding 200 small business events in small towns back in 2003-2005. These “unscalable” events grew the business through higher conversion rates, adoption, retention, product improvements, and a robust, engaged customer community.

Looking at the top marketing tools companies use to manage and grow their lists in 2024, Active Campaign ranks #2 in terms of revenue behind Campaign Monitor.

Active Campaign Revenue in 2022 hit $150m. GetLatka reached out to ActiveCampaign to confirm $250m revenue comments from their CMO on a recent podcast. The company did not confirm this number.

How did the company add customers between 2013 and 2023?

Scaling from 100 to 185,000 Customers

As of June 2024, ActiveCampaign has 185,000 customers. Assuming customers continue to pay $1,100 per year on average (extrapolated from 2020 Active Campaign revenues of $165m with 150k customers), Active Campaign Revenue is $200m as of this writing (Aug 2024).

On a logo basis 80% of Active Campaign customers have under 100 employees. The firms top geography is the US followed by Europe.

Traffic: Most traffic comes from word of mouth today.

Leads: Active Campaign uses a 14 day trial to capture leads.

Customers: Customer convert as their lists grow and they want extra features like automations.

VandeBoom’s deep involvement in product development, customer flows, and UX help power the customer experience.

Senior Design Director Valerie Craig shared:

“I’ve worked at a number of companies, but I’ve never worked for a founder who is also the technologist behind the product. Jason gets it. In a design review, he’ll say, well, when somebody hits send we should make sure that they feel excited and comfortable because it’s such a nerve wracking moment to hit send,” she said.

He sees that, in comparison to the startup that I worked at before where the CEO never truly understood what the experience was for the user; he was more of a salesperson who didn’t understand the technology. Jason’s like a full swing in the other direction: he’s the guy who made the thing.

In addition to having an empathetic founder, integrating with the ecosystem can create extra productivity gains. Lets look at how Active Campaign is helping its customers increase productivity with integrations.

Integrations as an Active Campaign Revenue Growth Strategy

Customers pick Active Campaign to use over 850 app and service integrations – a high point in the industry.

Like a “Zapier for Email”, the company has pre built 750 automation templates (‘recipes’) making it easy for customers to do things like “send email to customer once Stripe customer account created”.

Top integrations include Shopify, Square, Facebook, Eventbrite, and Salesforce.

While integrations grow, the firm still makes mistakes. VandeBoom has a unique approach to handling customer churn. Lets dive in.

How a CEO Should Handle Churn Customer Feedback

As a CEO scales, and demands on their time increases, it’s a constant battle to keep customers front and center.

VandenBoom reads a twice-daily set of notes from ex-clients on why they stopped using his company’s product.

He also studies customer feedback (positive and negative), support tickets, and employee exit interviews to be sure he has the full picture of how well the business is serving its customers and treating its employees.

Learning from churn is one thing, but how does this drive product strategy?

Product Strategy Over Time, Active Campaign Revenue

In 2013, VandeBoom went live with his point solution offering for Email Marketing:

• $9 for 50 contacts
• $17 for 1,000
• $29 for 5,000

One of the earliest examples of usage based pricing revenue model. The company offered a free plan and had about 120,000 free users at this time period.

By 2017, the firm was multi product with clear variable pricing:

• $17/mo for 1,000 contacts
• $70/mo for 1,000 contacts

The pricing page featured a contact slider where dynamic pricing updated across 4 key plans representing different product groupings: Lite, Plus, Professional, Enterprise.

By 2023, the company had developed products for different Job Titles:

• Transactional email APIS for developers
• Sales tools for Sales Leaders
• Bundled Sales and Marketing

Each of these product bundles features their own pricing. The Product strategy reminds Latka of the Hubspot product strategy:

1. Point solution to start
2. Then Variable pricing
3. Later additional Product lines for different job titles
4. Today, clear enterprise expansion strategy

For context, getting 185k customers to pay an extra $1k per year would double Active Campaign revenue from $200m today to $400m.

Power user Bruno De Figuered chose to go all in on Active Campaign many years ago saying: “They really listen to customers. The tool offers highly customizable and complex workflows. The advanced segmentation, conditional logic, and lead scoring enable super personalized marketing campaigns. This flexibility is great for both small businesses and larger enterprises.”

Increasing conversions from at PLG motion at the top of your funnel is a delicate balance. Having large sample sizes to test on helps.

After Active Campaign hired more growth talent, they began to narrow down their strategy.

3 Tactics Used: 50,000 New Trials in July 2024

The firms is signing up 50,000 new trials per month using its PLG model.

Most PLG motions get stuck converting users to paid, and then expanding those users usage across multiple product lines.

Casey Hill joined Active Campaign in July of 2023 as Senior Growth Manager. In an August 2024 call with Latka, he shared that most new customers are coming from:

Linked, Earned Media, and Influencers.

On Linkedin the company spends $50 per day on thought leader ads to promote posts from its customers. The team is encourage to post too:

“On a channel called Operation LinkedIn, we have everyone share the posts that they’re doing. We try to have a topical focus, talking about marketing automation, owned assets, AI—anything that ties back or relates to our product. And we tried to gamify it a little bit,” said Hill.

He continued:

“We have what we call the 10k club, which means you got at least 10, 000 views that week. We show what the top performing content was each week, to give people specific examples of how they could up level. And so we continued to grow that. Our first goal as a team was to have 150,000 views a week, then 200,000, then 250,000. And I think we’re now a little bit north of 300,000 a week.”

On Earned Media, he leaves a review for podcasts in his industry, takes a screenshot, and emails the host asking to come on the show.

Their new podcast Angels and Insights got 4k downloads on its first episode.

The company pays 30-50 influencers a variable based fee based on new customers. Each influencer is given a target of signing up 10 new customer accounts with average ACV of $2k. The top influencers are:

• Raj of Startup Hype Man, 16k linkedin followers
• Ashley Hall in the creator space
• Bilaji in the SaaS vertical, B2B Marketer

“The influencers are performance-oriented deals; for example, I sit down with a brand and say, ‘In the next quarter, our target is 20 paid accounts. I take the average annual amount that a customer pays, and that’s the cash we would split 50-50. Let’s just say the average customer pays $2,000 a year, with a target account of 10 for a total of $20,000. I would pay that influencer $10,000 up front; they get the remaining $10,000 if they hit that specific target,” said Hill.

… And they’d have a whole set of deliverables, social posts, and videos as well. The challenge with influencer marketing is often when someone does a post, it gets some views, but what’s the actual revenue impact of it?

Hill recommends targeting a CPM of 30 to 60 for short form content, but says that if you’re going for long form video content, that number can get pushed up quite a bit, to 100–200 CPM.

Bootstrapped to $15m then $320m Raised

VandeBoom bootstrapped from 2003 until October 2016. The firm raised its $20M Series A when Active Campaign revenue hit $15m. Estimating the company sold 10% in their Series A, the $200m valuation implies a revenue multiple of 13x.

Prior to that raise, we believe VandeBoom owned more than 90% of the company personally since he had no co-founders but likely had give early employees equity grants.

In January 2020, the firm raised $100m from Susquehanna Growth Equity – known for its founder friendly model where they’ll allow founders to cash out a portion of the round (a Secondary Sale). Latka was not able to confirm if VandeBoom sold any of his shares personally in this round.

In April 2021, the height of the SaaS Market where valuations were frequently topping 40x revenue multiples, Active Campaign raised $200m from Tiger Global at a $3b Valuation.

Active Campaign revenues were $165m and valuation was $3b – an 18x multiple. This multiple is below what other firms at similar sizes were raising for in 2021 (40x multiples) which implies these terms were likely extremely founder friendly – potentially even a secondary sale.

The firm went on to acquire Postmark in 2022 and Onesend in 2023 growing the team to 1,000+ before downsizing by 150 in Q4 2022.

Today the team has 814 total employees and 232 sales reps across 6 continents, including North America, Europe, South America, and a new hub just opened in Feb. 2024 in Krakow, Poland.

Active Campaign Founder Jason VandeBoom’s Net Worth hits High of $1.8 Billion

Grey cells are estimated. 6.67% sold in 2021 is confirmed.

VandeBoom was the sole founder so we’ll assume 100% ownership on day 1.

The company sold 6.67% in its $200m Series C.

If we make the following assumptions:

• The firm sold 10% in its Series A
• The firm sold 8% in its Series B
• 5% was added to the ESOP pool at each round

Then after the Series C round, VandeBoom’s net worth was $1.8 billion on paper (61.24%)

• Employee owned stock on a fully diluted bases was worth $525m (17.5%)
• Series A investors $20m position was now worth $230m (7.67%)
• Series B investors $100m position had doubled to $220m (7.36%)
• Series C investors $200m position was for 6.67%

However, Latka believes valuation has declined for the following reasons:

1. The company downsized from 1000+ FTE’s in 2022 to 850 by Jan 2023
2. A June 2024 podcast episode with the CMO of company mentions “Active Campaign Revenue $250m” in the title. When Latka reached out to verify this number with the company, the firm chose not to confirm. The podcast host did not have a raw copy of the transcript to share. We believe the firm may pass $250m ARR this year, but as of August 2024 its not there yet.
3. We know the firm had 150k customers paying $1.1k per year on average in 2021 ($165m of revenues publicly announced).
4. If 185,000 customers are still paying $1,100/year on average today, the company has $203m in ARR. This means the company has “only” added $50m in ARR since 2021 – a low revenue growth rate relative to most VC expectations.
5. 2021 was frothy for all SaaS companies with inflated multiples.

Latka believes the company should be worth about $2b today, a 10x multiple on $200m of ARR.

Growing Active Campaign Revenue with Integrations, Automations, Generative AI

ActiveCampaign is leaning in to 3 key themes:

More integrations – think App Exchange

More template automations – think internal Zapier

Introduction of Generative Artificial Intelligence – think automatic sequences getting built

Users can type a single setence prompt and have Active Campaign do the rest of the work. For example:

“Build a week-long drip series with three emails for current free trials who have not used the product yet”

The company generates the entire sequence, and its customers can tailor the automation steps however they need.

Valerie Craig joined the company in Sept of 2020 and shared with Latka:

“As we’ve woven AI more into the fabric of our platform, we’re looking for ways to weave in your use case in your industry so that you can navigate it. The more information we have about you and your industry, the closer we can tie it to ActiveCampaign’s recommendation feature.”

ActiveCampaign is also putting more resources into predictive AI: using historical and current data from earlier months, quarters, and years to identify patterns and predict potential outcomes. For marketers who want to stay one step ahead of the curve, predictive AI works much faster than trying to generate their own forecasts.

Another area of future growth is the use of dynamic and static data to feed automation. Dynamic actions are actions the customer initiates: opening an email, purchasing a product, stopping by a landing page. By lead scoring those behaviors, ActiveCampaign plans to build better automations to serve them. Static inputs (the customer’s industry, chief pain points, company size, etc.) gathered along the way are useful to create better customer experiences.

Promptology (the art and science of writing good AI prompts) will be a sought-after skill in the years ahead, and ActiveCampaign is creating templates and streamlined UIs with clarifying prompt parameters, in order to produce the best copy and visual imagery and optimize the impact of a customer’s messaging.

Full channel omnimarketing has a seat at the table as well. Customers interact with brand messaging across multiple channels including social media, advertising, web content, blog, and email. Leading specific customer segments through different funnels lets them engage with a brand in the most comfortable way for them, but keeping track of data and creating multiple customer lists can be complex. ActiveCampaign’s marketing automation software simplifies and optimizes these tasks.

Can they Beat Campaign Monitor and MailChimp?

I believe Active Campaign has built a product suite that can take it to $500m in ARR:

1. 4 key product groupings targeting 3 key job titles and budget: Marketers, Sales teams, Developers.
2. Clear ACV expansion opportunity through cross-selling: Avg ACV is $1,100 today but a mean would be more useful.
3. $50,000 Customers: I suspect power laws apply here where the top 10% of customers make up 20-30% of total revenue. How many customers pay Active Campaign more than $50,000 today? Any $1m+ ACV customers?
4. Sustainable: With an estimated $200m in ARR today and 850 employees, the firm generates $250k in ARR/FTE (plenty of margin!)

If the firm can integrate Generative AI to increase productivity of its users, and not just use AI as a marketing tactic, expect to see 50k new trials per month balloon to 100k+.

If the company can convince its 185k customers today to spend an extra $2k per year for the extra productivity gains, the firm grows from $200m to $570m in ARR.