Run the Numbers
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
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00:21:44 · CJ Gustafson
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00:22:41 · CJ Gustafson
[00:22:41] S0: Does this playbook actually work? I'm so glad you CJ. Well, here's the question I most wanted answered in the s one. On a like for like basis, once a business has been inside Bending Spoons for a year or two, is it actually any better? Or does it just look better because they keep buying new toys? Well, Evernote is the cleanest evidence that the Playbook is legit. They acquired it in January 2023. They cut the team from 341 people to 60, an 82% reduction in force. They flattened management from four layers to two. They tore the monolithic code base into micro services and moved it to an event driven model, which dropped IT infra expense as a percentage of revenue by 47% in 2025 versus 2022. Not bad. Grew product releases 50% in 2023, then doubled them in 2024 with a smaller team. Grew revenue, improved profitability, and now post the highest net revenue retention in the portfolio at 99%. So, yeah, that worked. And then you got Rimini. It's the growth proof point. They were acquired in 2021 and rebuilt from scratch. And by 2025, it served more than five x the monthly active users of its pre acquisition self. It generated more than nine x the revenue and grew average revenue per user 50% even as the user base grew fivefold. Oh, and they hit six viral spikes as the team engineered on purpose using their own marketing screening tools. Oh, AI. Forgot about AI. The engine under all of this is AI and it cuts in three directions at once. So first, it's their sharpest tool for operating leverage because inside their own engineering org, the share of pull requests authored or co authored by AI went from 10% in q one of twenty twenty five to over 90% a year later, with roughly 70% written by AI alone. And revenue per Spooner more than doubled from 1,120,000 to 2,570,000 in two years. So that's how 286 new hires run a portfolio of serving 8,000,000,000 people. Second, it decides whether the things they buy survive. Some of the portfolio gets supercharged by AI. Rimini is an AI app, and photo and video editing get more and more valuable as the models improve. But some of it sits directly in the blast radius. So note taking now competes with ChatGPT Notion, tough comp set there. File transfer is a feature rather than a product. Third, and this is the clever part. AI is also their deal pipeline.
00:24:52 · CJ Gustafson
Their pitch is that is more owners watch AI threaten their business and realize they can't keep up. More of them sell, valuations come down, and the targets get cheaper. So the same force that threatens the assets they already own also kinda refills the shopping cart, which is funny. And that works as long as Bending Spoons is always the buyer and never the bot. If you never have to sell, you never have to catalyze a final price. In the meantime, the market will weigh you daily. So the playbook seems very real. I was underwhelmed by the revenue growth, but pleasantly surprised by the cost savings. And the open question isn't whether they can fix a business, it's whether the business they can buy will still exist in their current form in five years. Let's talk about the debt engine they've got. It's pretty large. So operating cash flow doesn't fund the acquisitions, debt and equity do. In 2025, Bending Spoons threw off 291,000,000 of operating cash and spent 1,850,000,000 on investing, almost entirely acquisition. The 1,500,000,000 gap got plugged with 1,940,000,000 of financing. In q one of twenty twenty six, they deployed another 1,650,000,000 and raised 1,740,000,000 to do so. Across 2023 through q one twenty twenty six, they put roughly 4,600,000,000 to work buying companies against a few 100,000,000 a year of internally generated cash. The fuel is this stack of term loans. They tap the term loan a market repeatedly. They added a 710,000,000 facility in 2024, 925 and 350 in 2025, two more, and I think these are euros, $476,000,000 tranches, then a fresh 950,000,000 and 300,000,000 in January. I'm not even gonna read the rest. These folks got a lot of debt, but they have a lot of capacity. Right? They have undrawn revolvers, which sounds like a weapon. So there's dry powder for the next deal. The cost of all that leverage is now compounding faster than the business. So I mentioned interest expense grew 337% in 2025. They paid a 143,000,000, just interest expense, and 382 percent year over year if you look at q one of twenty twenty They paid 93,000,000 in interest expense in the first quarter, and that was against revenue growth of 95% and a 132. So 2025 interest ate 51% of operating income. Q one of twenty twenty six ate 78% of operating income.