Not every company is struggling in this downturn.
Despite a cooling market, corporate spend management startup Ramp reports that it has more than doubled its revenue run rate since the start of the year.
The feat would be impressive in normal times, but is particularly so when tech companies — big and small — are laying off, freezing hiring and/or reporting slowing growth. But it’s even more notable for a startup — in an increasingly competitive space — to more than double revenue in a matter of months amid worsening 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 to $8.1 billion.
Now, the company is not just seeing more SMB customers — a logical assumption considering that Ramp’s biggest competitor Brex recently announced it would largely stop serving businesses in that category. According to CEO and co-founder Eric Glyman, it’s seeing increases across all stages of company maturity.
In June in particular, he said that Ramp closed overall 38% more business — anticipated revenue from new customer sign-ups — than it did in May. Interestingly, the company saw the most growth in its enterprise segment — with more than a 300% surge in customers there. It also saw a more than 50% increase in mid-market customers, and about a 22% bump in SMB clients. June’s growth figure is more than double, or about 221% higher than, December 2021’s figures, the company said. While Glyman did not reveal hard revenue figures, he did point out that the company had crossed $100 million in annualized revenue before its third birthday in March. This is, he added, while keeping more than 80% of its equity capital raised on the balance sheet.
Recall that Ramp makes its revenue off of interchange fees. For every transaction it powers, Ramp receives a portion of the spend as top line. Annualized revenue is the interchange earned in the most recent monthly period, annualized. Let’s also recall that rival Brex — which started out offering credit cards to startups — declared earlier this year that it was making “a big push” both into software and enterprise.
“We believe that Ramp’s ability to help its customers spend 3.5% less is uniquely appealing and valuable to businesses in this macroeconomic climate,” Glyman said.
“Our biggest hope is to go to work for more companies that are looking to cut costs, become efficient and do it in ways that improve the quality of the business, while preserving the ability to make investments and support people and staff,” he told Nob6 in an interview.
Last week, another player in the space, Airbase, said it had secured $150 million in a debt financing led by Goldman Sachs. It’s interesting that while that company has historically generated most of its revenue from software, it is now enhancing its card offering.
CEO and founder Thejo Kote told Nob6 that generating SaaS revenue for the company remains its priority. But, he said, as the company has served midmarket and early-enterprise companies over the years, it has offered them a pre-funded card that they could use to make purchases. In recent months, though, Airbase has come to realize that many could benefit from the ability to make purchases with “30 days of float,” the executive said.
“We started this process of offering a charge card model because as we continue to grow and scale revenue and grow our customer base more aggressively, we found that there are definitely customers out there who can’t afford to give up on the 30-day float that a card provides them either because for cash flow reasons or because of philosophical reasons,” Kote said.
Meanwhile, while Ramp does provide software, interchange remains its biggest revenue driver. And going forward, the 350-person company plans to operate with the same strategies that have propelled it to this point.
“We’ve been conservative with our use of funds and aimed to be operationally efficient,” Glyman said. “We’ve been able to be very lean and effective, and we’ve been able to keep meaningfully more than than 80% of the capital we’ve ever raised. When we look at the size of folks that are in the same industry category, generally they have multiples more employees for either similar or meaningfully less revenue scale.”
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