LYMB.iO is a Munich-based sports tech company with a mission to make the world more physically active through gamification. It does so through a combination of hardware and SaaS subscriptions, with a model that generates super sticky SaaS revenues.
LYMB’s initial growth has come through B2B sales to a wide range of venues, from sports clubs to kindergartens. The company is poised to launch a consumer product soon as well and has begun taking preorders for the at-home console.
Introductory stats at a glance:
- LYMB offers gamified full-body workouts through its hardware + SaaS model
- LYMB has B2B customers in 45 countries
- Home console taking preorders now, $300k in GMV
- $4.5m in hardware sales, ranging from massive LED walls to in-classroom units
Markos Kern, CEO and founder of LYMB, discussed the company’s journey thus far in an innovative and experimental new space.
$45k in Super Sticky Hardware Attached Annual SaaS Revenues
In early hardware sales, LYMB operated on a lifetime license model for the software component powering its hardware, with an intent of pivoting to a SaaS model at the opportune moment. Those early sales generated higher margins thanks to the built-in cost of the lifetime license, which helped the company navigate cashflow in the early days.
The right moment to switch over to a SaaS model came in January 2021. At that time, the company abandoned the lifetime license model and switched to a SaaS model. New hardware purchases from then until present carried a lower initial price tag (due to the removal of the paid lifetime license) but a monthly SaaS fee obligation.
After the pivot, the company then brought in $45k in hardware-attached SaaS revenues in 2021. Kern clarified that this revenue comes exclusively from accounts tied to hardware sales after that January 2021 switchover. This SaaS revenue will continue to grow as the company continues to sell new hardware. Kern has his sights set on the upcoming home console launch, which will drive a significant increase in SaaS revenues for the firm.
Especially notable here is the super sticky nature of the SaaS revenue (post-January 2021). As a premium-priced hardware product essentially defining its own category, LYMB’s devices tend to be a difficult sale. But once the sale is made, the SaaS revenue continues throughout the useful life of the product.
Staggering 100% Retention Rate in First Year of SaaS Model
Just how sticky is the company’s SaaS offering? Asked about this, Kern reported that in the 12 months since turning on the SaaS component of the business, LYMB has not lost a single SaaS customer. The company has achieved the seemingly impossible: a 100% retention rate over its first year.
$6.5k per Month in December 2021 Puts SaaS Revenue on an Upward Trajectory
The company reached $45k in annual SaaS revenue during year 1, which would average to under $4k per month. But breaking the revenue out by month reveals a striking growth trajectory. LYMB saw $6.5k of monthly SaaS revenue in December 2021. Assuming the 100% retention rate holds, the company would pull in $78k in 2022 without selling a single piece of additional hardware. And with an upcoming B2C hardware launch, additional hardware sales are all but guaranteed.
600 B2B Hardware Sales Thus Far, for $4.5m in Hardware Sales
The company’s B2B hardware sales to date have hit 600 device installations. These devices range from $60,000 large-format outdoor LED walls to full squash court-sized video walls to smaller in-classroom units that sell for $4,500. Production COGS is around 70% for all unit types, according to Kern. And because LYMB is a first-party exclusive distributor for their own hardware, the company achieves a healthy margin on hardware alone.
Hardware sales to date have reached $4.5m, with 1.35m in gross margin on those sales. Of that lifetime hardware sales, more than half of it — $2.5m — occurred in 2021.
2.9X Growth in 2021: Is LYMB on the Verge of Explosive Growth?
Kern noted that launching a hardware product is notoriously slow, and this is certainly even more true when that hardware product is creating an entirely new category. The company has been around since 2016, and growth was indeed slow at first. Early hardware sales started in 2017, and the company sold a total of two units that year.
By 2020, the company had begun to find real traction. Then in 2021, LYMB grew 2.9 times its sales volume the previous year. As the company looks toward a round of funding in the second half of 2022, the company’s growth trajectory is an important topic.
Multiple signs suggest that LYMB could well be on the verge of explosive growth. With a total of just 600 units sold on the B2B front, the market is far from saturated. Market awareness remains a challenge: do target businesses know that LYMB exists, and do they understand the need or use case for LYMB’s hardware?
500 Pre-Orders of Home Console
Another sign pointing to potentially explosive growth is the coming launch of the LYMB ONE physical gaming system. Thus far, the company has netted 500 pre-orders of this $1,480 in-home console. Preorders will soon surpass total B2B units sold. And if LYMB ONE catches the wave of at-home gaming and fitness, sales could grow exponentially over the course of 2022 and following years.
The LYMB ONE currently costs the company around $1k in COGS, so the $1,470 retail price nets LYMB roughly $450 per unit. Kern noted that the initial round of pre-orders were funded via Kickstarter and sold below COGS. The company planned for this lost revenue and expects to regain it via new (profitable) hardware sales and ongoing at-home SaaS revenue.
A Closer Look at LYMB’s SaaS Revenue: $6.5k MRR from 10 to 13 Percent of Hardware Customers
LYMB’s current MRR from SaaS revenue is only a small slice of annual total revenue, which deserves a closer look. As mentioned earlier, current MRR sits at $6.5k (and grows with every new hardware sale). When asked how many current hardware customers are paying for SaaS, Kern pegged the figure at between 60 and 80, or between 10 and 13 percent of all hardware customers. As the customer base grows, the initial batch of lifetime-license customers will shrink to an insignificant percentage and MRR will continue to grow with every new sale.
LYMB does not currently offer any SaaS product or subscription independent of hardware. The value of the LYMB ecosystem is the extremely tight integration between hardware and software, so Kern sees no need for a standalone service at this time. And once more the hardware integration has a pleasant side effect of making SaaS revenue extremely sticky.
$6.5k MRR in SaaS Fees Averages to $95 per B2B Customer Per Month
LYMB offers its B2B customers a range of SaaS plans, each with its own set of features and functionalities. Averaged together, the typical B2B SaaS contract value brings in $95 per month or $1.1k per year.
$0 Spent to Date on Advertising
Notably, LYMB has spent no money to date on advertising. Its 32-person team includes 6 sales employees, and inbound leads have generated as much business as the team’s production capacity has been able to handle. (Pandemic-related supply chain and manufacturing constraints have led to both increased costs and production constraints, though industry watchers anticipate these hurdles beginning to clear sometime in 2022.) One has to wonder what growth will look like once LYMB scales up its production and marketing capacities, especially on the B2C front.
$1m in Seed Funding in 2021, Smaller Fundraising Prior
When asked about funding, Kern reported relatively low levels of funding thus far. These included smaller bits of fundraising prior to a seed round in 2021. He noted that investors tend to look skeptically at hardware companies due to the high development costs and significant risks. But once the company had both a deliverable product and a demonstrated sales record, the time was right for a round of seed funding.
In June 2021, LYMB raised $1m in a seed round, which the company has used to expand its team and invest in the consumer facing LYMB ONE home physical gaming system.
55% Founder Equity Remains Heading into Series A Funding
To date, LYMB’s cap table is simple. Existing investors hold 35%, while another 10% is reserved for an ESOP plan. That least 55% of equity that remains with the founder. With this remaining equity, Kern is confident about the company’s prospects as it heads into Series A funding later in 2022.
The company is heading into investment talks at time of publishing, so Kern declined to discuss a target valuation for the upcoming round. The $7m valuation from the previous round was determined before much of the company’s 2021 growth and — crucially — before LYMB began seeing returns on the SaaS component of the business.
6 Patents Across 3 Categories (2 Granted So Far)
Defining a new hardware category comes with plenty of challenges, but the opportunities are equally significant — especially for companies that own IP and can secure patents for truly new technology applications. LYMB has done exactly this, with a total of six patents spread across three categories. Four are pending as of early 2022 and two have already been granted to the company (including in the US). LYMB’s ability to secure patents for its products and technology further bolsters the company’s position heading into both funding and more growth.
5 In-House Game Developers (Plus External Devs) Building Game Library
Any gaming technology platform is only as good as the games its hardware can run. To that end, LYMB currently employs five in-house game developers, who are responsible for between 70 and 80 percent of the content available for LYMB hardware. The rest of the content comes from external developers, who are incentivized to build for the platform thanks to a revenue-sharing program.
When asked about the long-term vision for the platform’s app economy, Kern envisions a future where the split looks more like 20/80 than the current 75/25. Of course, enticing external game designers to design for a new, niche platform can be quite challenging. Future growth and market saturation may be the key to growing an external app ecosystem.
In summary, LYMB.iO has achieved quite a bit in its five-year history, pioneering a new class of hardware, creating and defining its use case, and building out an initial app ecosystem for its growing customer base. The challenges are real as well: device manufacturing is a notoriously difficult market for newcomers, and current supply chain chaos isn’t helping, either.
But given the company’s impressive growth trajectory over 2021, its pivot toward super sticky SaaS revenue, and the likelihood of a Series A infusion later in 2022, there’s potential for ongoing growth. Whether that growth is metered or explosive (or any of a hundred points in between) remains to be seen. If LYMB.iO can overcome the remaining hurdles in manufacturing, deliver a stunning B2C home console, and scale its marketing initiatives, then the scale in all likelihood tips toward explosive.