Run the Numbers
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.
00:14:12 · CJ Gustafson
Here's what they add back to get from a GAAP operating income of 278,000,000 to an adjusted operating income of 613,000,000 in 2025. How do you get there? Amortization impairment of acquired intangibles, zap out a 151,000,000. Transaction related expenses, kill 85,000,000. Reorganization related expenses kill another 79,000,000. Other items not indicative of core performance. What could be in there? Woah. 21,000,000. That is 335,000,000 of adjustments, which is more than the 278,000,000 of operating income they actually reported. So get this, the add backs are bigger than the profit. Love it when they do that. Now some of this is defensible. Amortization of acquired intangibles is truly a non cash accounting artifact of buying companies. And at a serial acquirer, it's permanently elevated. It's it's absolutely their favorite line item, can tell. It's the same like how adjusted EBITDA was every leveraged buyout's favorite line item in 2007. So if you're going to own a roll up, you have to be at peace with adding back amortization or you will never see the cash. The reorganization line is where I would slow down. So quote, reorganization related expenses is the cost of firing the people at the companies they buy. It was 79,000,000 in 2025, and more strikingly 76,000,000 in q one of twenty twenty six alone, which is about a quarter of that quarter's entire adjusted operating income. So remember the playbooks, the principles. Step two is the restructuring. Cutting Evernote from 341 people to 60 is less a one time event and what they do over and over and over and over again when they buy a company. It's the business model. Yes. It's one time, but it's what they do one time over and over again. So when the recurring cost of running your business is being treated as a nonrecurring add back, CFO's years should... Yeah. They should perk up. And then there's the tax, which is why GAAP net income is such a mess. In 2023, a 103,000,000 tax benefit flattened the bottom line. In 2025, the effective tax rate ran near 100% of pretax income of 111,000,000 because net income of basically nothing. The Danish founded Milan headquartered multi jurisdiction structure. I would hate to do taxes for this company. Makes the tax line jump around like a Rasheed Wallace technical foul. Get out. You're same. Ball don't lie, baby. Taxes don't lie either.
00:16:25 · CJ Gustafson
Sometimes they do, which is part of why they want you looking at the adjusted numbers in the first place. This is a house of adjustments, and whether you want to live in it depends on how much of the cost of buying and gutting companies you're willing to call non recurring. How do they make money? Well, once you get past the m and a, the operating model is clean and it's it's kind of beautiful. So revenue is overwhelmingly subscriptions and acquisition is overwhelmingly organic, and that is acquisition of customers. So customers acquired through organic channels, word-of-mouth, non paid search, accounted for 79% of revenue from new customers in 2025. They deliberately favor targets that don't lean on paid advertising. Why? Because ad driven acquisition is volatile, and they want revenue they can forecast. When you buy a brand like Evernote or AOL, the demand walks in the door for free out of two decades of habit. Cost of revenue is mostly three things. You got amortization of acquired intangibles, you got cloud infrastructure, which is AWS and Google Cloud, and the tolls they pay to get paid. This part's really important. This is the app store tax. So in q one of twenty twenty six, 75% of revenue came through electronic payments, and a third of that ran through the Apple App Store or Google Play, where Apple and Google retained 15 to 30% of the transaction. By contrast, Adyen, PayPal, and Stripe charged 5% or less, and a wire transfer costs them like nothing. The filing more or less shrugs and it admits that customers convert better when the app stores are the default. So, hey, we'll keep on paying that toll, which raises the question I'd want answered on the road show. So as Bending Spoons scales to a billion users, can it use that buying power to negotiate the App Store and processing fees down? That's real money if you can do it. A few points off a 15% to 30% take rate across a growing subscription base is its own profit lever, and it's not really talked about as loudly in the s one as I'd expect. Improve that gross margin, get past that mid 60. And the reason they can pull this off across 10 unrelated apps is the stack of proprietary technology they deploy into every business they buy. So fun names incoming here, folks. Pico, Lumen, and Abacus, the shared data infrastructure processing 3,800,000,000 data points a day.
00:18:38 · CJ Gustafson
Minerva, an AI model that estimates customer lifetime value in real time feeding marketing and pricing. Juno, the payments and checkout systems, the thing that lets them rip out a new acquisitions billing stack and plug in their own optimized one. Janus and Orion, the experimentation toolkit running hundreds of concurrent AB tests. So the moment they acquire a company, Juno gives them a better checkout. Minerva gives them better pricing, and the experimentation suite gives them a thousand monetization tests they couldn't run before. While the companies are all standalone, yes, like you don't like try to cross sell Evernote and Eventbrite, they do benefit from software infrastructure and monetization expertise that's been proven across the companies in the portfolio. Hey. Thanks for listening. We'll be right back after a word from our sponsors. SaaS and AI spend is heating up, and most finance and procurement teams are already searching for shade.
00:19:32 · CJ Gustafson
[00:19:32] S1: Uber burned through its entire 2026 AI budget in four months. ServiceNow did the exact same thing. Your vendors are counting on you to sweat through your next renewal and pay more than you should. Cool down your SaaS and AI spend this summer with SpendHound. Through June 12, qualifying companies that sign up get 500 just for getting started. Teams using SpendHound reduce software and AI spend by up to 30% using real pricing benchmarks from over 1,200 companies across 10,000 AI and SaaS vendors. So when your next renewal hits, you're not taking the heat. You know exactly what fair pricing looks like and what you should negotiate for. SpendHout also includes on demand procurement experts who build negotiation strategies, review contracts, and go strike emails on your behalf. That means you can stop getting burned by the tools you need and cut the ones that you don't before that auto renewal torches your budget. Rated number one on g two in SaaS spend management, SpendHound is free forever. The team's up to 1,000 employees and only $10,000 per year for enterprise teams with $150,000 in savings guaranteed. Don't let your vendors enjoy your summer budget more than you do. Sign up by June 12 and get $500. How's that for a hot deal? Go to spendhound.com/cj. That's spendhound.com/cj. The CFO role has evolved faster than the tools built to support it. Most finance teams are still running infrastructure designed for a job that no longer exists. The reporting, the reconciling, the close that bleeds into the next month or quarter. That's not finance. That's overhead with a really crappy title. And the cost isn't just your time. It's everything your best people aren't doing while they're barely getting it. Agentic finance shouldn't multiply your output. It should eliminate the work that was never worth doing in the first place. And that's why I run Mostly Media on Brex, an intelligent finance platform with AI powered agents that capture expenses automatically and force policy before the spend happens and close your books in minutes instead of weeks. 35,000 companies like OpenAI, Coinbase, Anthropic, and DoorDash already run on Brex. It's time to get Brex AF. Learn more at brex.com/metrics. I've seen a lot of FP and A tools, and Aleph is one of the few that gave me that moment within minutes.