Not all businesses are struggling in this downturn.
Despite a declining market, enterprise expense management startup Ramp reports that it has more than doubled its revenue rate since the start of the year.
The feat would be impressive in normal times, but it’s especially impressive when tech companies — big and small — are laying off staff, freezing hiring, and/or reporting slowing growth. But it’s even more remarkable for a startup — in an increasingly competitive space — to more than double revenue in a matter of months amid deteriorating market conditions.
Ramp confirmed in March that it had secured $550 million in debt and $200 million in equity in a new financing that doubled its valuation at $8.1 billion.
Now the company isn’t just seeing more SMB customers – a logical assumption given that Ramp’s biggest competitor, Brex, recently announced that it would be largely stop serving businesses in this category. According to CEO and co-founder Eric Glyman, this increases at all stages of business maturity.
In June in particular, he said Ramp closed overall 38% more business — anticipated revenue from new customer sign-ups — than in May. Interestingly, the company experienced the strongest growth in its enterprise segment – with an increase of more than 300% in the number of customers. It also saw an increase of more than 50% in mid-market customers and an increase of around 22% in SMB customers. The June growth figure is more than double, about 221% more than the December 2021 figures, the company said. While Glyman didn’t reveal any hard revenue figures, he did point out that the company has exceeded $100 million annualized revenue before his third birthday in March. This, he added, while keeping more than 80% of its equity raised on the balance sheet.
Remember that Ramp derives its revenue from interchange fees. For every transaction it powers, Ramp receives a portion of the spend as the front line. Annualized revenue is the interchange earned over the most recent monthly period, annualized. Recall also that its rival Brex – which began by offering credit cards to startups – said earlier this year that it was doing “a big boost” both in the software and in the company.
“We believe Ramp’s ability to help customers spend 3.5% less is particularly attractive and valuable to businesses in this macro climate,” Glyman said.
“Our greatest hope is to go to work for more companies that seek to cut costs, become efficient, and do so in a way that improves the quality of the business, while preserving the ability to invest and supporting people and staff,” he said. said TechCrunch in an interview.
Last week, fellow space player Airbase said it secured $150 million in debt financing led by Goldman Sachs. Interestingly, while this company has historically generated most of its revenue from software, it is now improving its card offering.
CEO and Founder Thejo Kote told TechCrunch that generating SaaS revenue for the company remains his top priority. But, he said, because the company has served midsize businesses and start-ups over the years, it offered them a pre-funded card they could use to make purchases. In recent months, however, Airbase has come to realize that many could benefit from the ability to shop with “30 days a float,” the executive said.
“We started this process of offering a payment card model because as we continue to grow and grow our revenue and grow our customer base more aggressively, we have found that there are definitely customers who can’t afford to give up the 30 days float a card provides them either for cash flow reasons or for philosophical reasons,” Kote said.
Meanwhile, although Ramp provides software, interchange remains its primary revenue driver. And going forward, the 350-person company plans to operate with the same strategies that have propelled it thus far.
“We have been careful in our use of funds and aim to be operationally efficient,” Glyman said. “We were able to be very lean and efficient, and we were able to retain significantly more than 80% of the capital that we never raised. When we look at the size of people in the same industry category, they typically have several more employees for a similar or significantly lower income scale.
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