00:02:49 · CJ Gustafson
Reorganize the teams. Read fire a lot of people. Rewrite the tech, redesign the product, and squeeze monetization. I e raise prices. Three, reinvest. Take those earnings, add some new acquisitions, and quote, prudent levels of incremental debts, and go buy the next one. Repeat until you own the Internet's attic. So founded in Copenhagen in 2013 and headquartered in Milan since they've completed more than 50 acquisitions. The current portfolio reads like a list of brands you assumed may have been buried next to BuzzFeed. So AOL, that was in January 2026. The email news and search portal that my aunt Pam still uses. Brightcove, February 2025, they do enterprise video hosting. Eventbrite, I bet you bought a ticket through them. March 2026, they do event ticketing. Evernote, I used to be a huge Evernote fanboy. January 2023, the note taking app with 200,000,000 lifetime accounts. I hate a cumulative metric like that. How many do they have today? Harvest, July 2025, time tracking and invoicing. Komoot, March 2025, outdoor route planning. So for cyclists and hikers. Rimini, June 2021 AI photo enhancement. StreamYard, I've definitely used that. April 2024 live streaming for creators. Vimeo, November 2025 video hosting, WeTransfer July 2024. The send a big old file tool. So in March 2026, the portfolio served over 500,000,000 monthly active users or as the kids say, mouse, and more than 9,000,000 monthly paying customers, which is a big step up from December 2023. Back then, those numbers are just 111,000,003. So the user base, bear with me, roughly five x in two years. And yet none of that was from a single product going viral, but rather a shopping spree. So who's behind this rebuilding? Well, in 2025, Bending Spoons received around 800,000 job applications and hired 286 people. That's more than the Greater Boston area. My goodness. That is a 0.04 acceptance rate. So Harvard's acceptance rate is roughly a 100 times more forgiving than that. And the people they keep, the Spooners, also my nickname at middle school summer sleepaway camp, operate under a doctrine they call uncompromising excellence. From their s one, it is uncommon for companies to part ways with team members who are performing adequately no matter whether stronger contributors are available. By contrast, we proactively make and act on such determinations even when doing so is difficult.
00:05:12 · CJ Gustafson
We are committed to producing substantial support to departing members. In Italian, they would say they fire your ass and cut you a check on the way out. So one more thing before we get to the stats. In more than a decade and 50 plus deals, they've actually never sold a business. Yeah. They've never sold a business. So the model actually assumes they never will. Every acquisition is underwritten as if they'll hold it forever. Alright. Let's do a metrics rundown before we get into how the software sausage factory is financed. So revenue, f y 2025 fiscal year, 1,300,000,000. That was up 95% year over year, up from 671,000,000 in 2024, and then up from 387,000,000 in 2023. That's an eighty four percent two year CAGR. Q one of twenty twenty six did 601,000,000, up a 132 percent year over year. Organic revenue growth, FY 2025, 13%. So if you strip out the acquisitions, that's what the underlying portfolio actually grew. It was it was 7% in 2024. So they went from 7% to 13%. So roughly 82 of the 95% growth points in f y twenty twenty five were bought, not built. Trailing twelve month revenue, if you give them a little more credit here through March 2026, it's 1,600,000,000. Gross margin, 66%. So this is if you smash them all together. It's 66% in 2025, 68% in q one of twenty twenty six. So it is climbing every year. It was 61% in 2023. Honestly, it's not that stellar for a group of software companies to only have a 60% gross margin. You'd expect it to be higher, but I have to keep reminding myself. It's not just like simply software companies. It's a portfolio of assets here. Subscription revenue. So where where does that revenue come from and and what is the makeup of it? 84% of q one twenty twenty six revenue was subscription. 12% was advertising, 4% was others. It was 95% in 2023, 92% in 2024, and 93% subscription in 2025. So the recurring revenue mix barely moves inside any single business, but it does move at the portfolio level because they keep bolting on new ones. So it looks like they took on some additional businesses like AOL that are not solely subscription revenue. Net revenue retention, it was 94% in q one of twenty twenty six. 93, 91, 95 if you go back the last three years. More on this later. Okay? So 94% net revenue retention. That's not gross, it's net. Net income in f y twenty twenty five, basically zero.
00:07:33 · CJ Gustafson
It was negative if we're being pathetic here, it was 200... Negative 200 k, down from 89,000,000 in 2024 and 161,000,000 in 2023. Those were positive numbers. So adjusted net income, f y twenty twenty five, three hundred and seventy six million. So that is up from 229,000,000 and 96,000,000 in the prior two years. And please hold that big old gap in your noggin for a second here. Cash on hand, 741,000,000. Total debt, 4,400,000,000. Net debt's around 3,600,000,000. They got a lot of debt. Interest expense on that debt, f y 2025, 143,000,000. That crew, 337% year over year. So q one alone, they paid interest expense of 93,000,000. Okay. Here's something that's great. Revenue per employee or Spooner, 2,570,000 per employee in 2025, up from 1,120,000 in 2023. This is one of those incredible numbers that you'll see in software when you do it right that you have leverage in your operating model, and it's core to honestly this company's entire thesis. Target valuation, big number. Well, I guess it's not as big as SpaceX and OpenAI and Anthropic who are also crowning up IPO airwaves. 20,000,000,000 and raising a reported 1,500,000,000 to do more acquisitions. The growth here is mostly bought. So revenue grew 95% in 2025, and like I said, pump the brakes before you tattoo that on your forum because organic growth was 13%. They define organic the honest way, which I respect. They said this year's revenue over what the same business did last year pre acquisition revenue included was 13%. So of the 95, roughly 82 came from wiring money to sellers, and 13% came from the businesses they already had in house when they started. 13% on a portfolio this size, it... It's okay. Yeah. Buying growth is their entire model, so I'm not going to clutch pearls about acquired revenue at an acquisition company. Gives me more pause is what's living inside that 13 because Brightcove revenue went down last year as subscribers left. Splice shrank the year before, and Evernote grew revenue while losing subscribers in some years because they raised revenue per user faster than the users walked out the door.
00:09:39 · CJ Gustafson
[00:09:39] S1: Hey, thanks for listening. We'll be right back after a word from our sponsors.
00:09:44 · CJ Gustafson
[00:09:44] S0: Here's a growth tax that nobody talks about. Every new pricing model you ship creates a nightmare for your finance team. Usage based pricing, now you're tracking usage against commitments. Product bundles, now you're untangling what to recognize and when for every line item. Mid cycle upgrades? Good luck manually reallocating revenue. The pricing strategies that drive growth are the same ones that break your finance process. Alright, Rev turns that irony into a competitive advantage. Your product team can ship new pricing without asking finance for permission, and your sales team can close deals without worrying about downstream chaos. But I've seen too many companies where sales are celebrating a huge quarter while finance is still trying to figure out how to recognize half of it. It's actually me. So here's a good place to start. RightRev built a free tool at calculator.rightrev.com. It scores your rev rec process, shows what's exposing you to risk, and tells you exactly where to focus before it bites you in the rear. Probably explains why your last close took so long. Check it out at calculator.rightrev.com. Alright without the Boston accent calculator.rightrev.com. I got news for you. The ERP category is finally getting disrupted. And if you haven't heard of Rilla yet, please pay attention. It's the AI native ERP built specifically to replace NetSuite, and it's already won over hundreds of finance teams. Their mission is to make these zero day close a reality, and they're actually doing it. We're talking teams closing the books at 01:35PM on the first day of the month. Companies like Wind Surf, Mercor, and hundreds of others run their entire finance stack on Rilla. Revenue recognition, closed management, multi entity, native Stripe, and Salesforce integrations. Whoo. Everything a scaling company needs. They've got 5.0 star... Five zero. Wow. Five zero stars on g two. They're backed by a 16 z and Sequoia, heard of them, and CPA led implementations that get you live in forty five days. That is simply unheard of in the ERP space. If your books aren't running as fast as your business, check out Rillet. Book a demo at rillet.com/cj. That is rillet.com/cj. That's me. Maybe the first thought you had when you started a tech company wasn't about scenario modeling or runway management or the fine print of an s one. I love a good s one.
00:11:57 · CJ Gustafson
That's not where the magic happens. It's more fun to build something new, design your quarter zip, or network with VCs. What But if you got your financials right early, long before your investors started asking? There's no limit to how far you can go and how many headaches you could stave off. Now that's where comes in. Has been a part of Silicon Valley since, well, it was just a valley, and it's helped some of the most successful names in tech go from start up to exit to mega cap. You build the next big thing, and with the teams across strategy, tax, audit, and transactions, will help you build your next big thing Learn more at ey.com/techstartups. That's ey.com/techstartups. A good chunk of the organic line is price hikes and monetization squeezes pressed onto a base of customers who've been there for a while, that that is slowly leaking rather than this bustling turnstile of new humans who are showing up. And the net retention number that I mentioned validates that as well because their blended NRR sits in the low nineties, which means the existing base shrinks a bit every single year before new logos try to plug that hole. By business, the spread is wide. So Evernote is 99%, AOL is 95%, StreamYard is 91%, and Rimini is 87%. And keep in mind, many of these companies are consumer or prosumer facing with little expansion potential other than price hikes. Right? You can't like sell more Evernote licenses to one person, like you only need one. And the contracts are largely month to month subscriptions through app stores or on credit cards. So retention becomes even more important when it's structurally harder to upsell and cross sell. So you're buying a 13% organic growth company that touts a 95% inorganic growth headline, which it depends which number resonates with you. Right? Which person are you? It probably says more about you and the company. Okay? So this is truly a house of adjustments. Their net income went down three years in a row while revenue tripled. Yeah. And that's not a typo. So cap net income was 161,000,000 in 2023, 89,000,000 in 2024, negative point 2,000,000 or 200 k in 2025. So the company's preferred number is actually adjusted net income, and that went the other way. It always does. Right? It always adjusts the other way. 96,000,000, 229,000,000, 376,000,000 most recently. So you gotta really work out that quandary in your head.