UserTesting helps teams get real time feedback from customers.
Revenues Hit $84m, 40% yoy growth. 3,500 Customers.
Company burning $1-2m per month, acquires Teston to help its users test in more languages
I had the chance to speak with UserTesting CEO Andy MacMillian on zoom yesterday (Tuesday March 17th) where we discussed their new $100m in capital, the virus plans, and a new acquisition.
He did the interview from his garage, in front of a greenscreen, computer balanced on top of his ping pong table as he and his family are staying put amid COVID-19 concerns.
LATKA Exclusive: “We’ve Just Raised $100m, Not Yet Announced”
UserTesting has just closed its Series F. Money was wired 3 weeks ago before COVID-19 hit the US and global supply chain.
MacMillian was able to raise the capital on terms he liked because the company grew from ~$40m in revenues in 2017, to ~$60m in 2018, to an $84m run rate as of today, a 40% TTM growth rate.
“We’ll pass $100m in revenues in 2020” says MacMillian citing $10m in net new revenue bookings in Q4 2019, and Q1 2020.
Today the company employs 500 people of which 100 are engineers, and 55 are quota carrying reps.
How Are you Handling the Virus?
MacMillian is building out field capacity and learning into growth instead of pulling back to preserve cash. He’s seeing a lot of interest in international expansion.
First overseas office in Edinburg Scotland opened last April (11 months ago) and now employs 42 people which make up more than 10% of the total company revenue.
Despite concerns about a global depression, MacMillian says “We’re comfortable burning $1-2m per month to drive growth,” and expects investment to pick up as they look to deploy fresh capital.
Pipeline growth was up 75% yoy so “we have capacity to hire reps and feed them with leads. We’ll invest in product,” says MacMillian.
So far with crisis, MacMillian says “some are holding budgets but others are moving all “in person stuff” into usertesting which is driving more demand.
UserTesting Acquires Norwegian Company Teston
The company is announcing it just acquired Teston to add to its last acquisition, TruthLab (which helps the company do AI video processing internally).
Teston will enable UserTesting customers to run more tests in more languages.
What are UserTesting IPO plans?
MacMillian says public markets are great ways to drive value in world but not in near term for UserTesting, at least not in next 24-38 months.
He believes that now is the time when you’ll see deals happen but says he’s not in any acquisition talks with his bigger competitors or partners like SurveyMonkey and Qualtrics.
UserTesting Has 3,500 Customers Paying Average $24k/Year
Users pay based off number of tests run per month and many companies spend more than $1m per year with UserTesting.
Core user was originally UX researchers on a product team to understand flows of product. This cohort is growing. Additionally, outside of this core buying group, other teams are using UserTesting like product and marketing teams running their own tests to better understand their customers.
Largest customer 3 years ago had 20-30 seats. Have a customer right now looking at signing a 10,000 seat deal.
UserTesting Has 101% Net Dollar Retention
Gross revenue churn is about 14% annually. Expansion revenue is about 15% for net revenue retention of 101%. Expansion revenue is growing due to unique setup the company has for customer success.
A Chief Customer Officer reports directly to CEO MacMillian. This CCO is only focused on making sure customers get incredible value. They do no upselling.
The sales team is focused on managing net new logos, growth, upsells, cross-sells.
Lastly, the customer success team is solely focused on metrics like gross dollar retention, CSAT, and adoption.
Get to know UserTesting CEO Andy MacMillian
Book he’s reading: The Goal
CEO he’s studying: Eric Yuan, CEO of Zoom.
Andy is 42 years old, married, with 3 kids and manages to get 7 hours of sleep each night.
What he wish he knew when he was 20: Focus as much on relationships as gathering knowledge. Its all about the people.