Sammy is the Founding Managing Partner at Blossom Street Ventures. Founders should email him at sammy@blossomstreetventures.com
The road was long. The company started with 10 people in Romania in 2005. It got to $50mm in ARR by 2018, then exploded to $580mm in ARR as of 2020. Nonetheless, the CEO’s letter highlights humility as a key theme.
Retention is excellent and drives growth. “Our dollar-based net retention rate was 153% and 145% as of January 31, 2020 and 2021, respectively. Our ARR was $351.4 million and $580.4 million in the fiscal years ended January 31, 2020 and 2021, respectively, representing a growth rate of 65%. Approximately 30% of this growth rate was due to new customers and 70% of this growth rate was due to existing customers. Furthermore, our dollar-based gross retention rate, which is the percentage of ARR from all subscription customers as of the year prior that is not lost to customer churn, was 96% and 97% as of January 31, 2020 and 2021, respectively.” It is notable that in 2020, PATH underwent an “internal reorganization of the customer success team that shifted their objectives from customer and product support to sales related activities. We grow with our customers as they identify and expand the number of business processes to automate, which increases the number of robots deployed and the number of users interacting with our robots.”
25% of employees are devs. “As of January 31, 2021, we had a total of 2,863 full-time employees. Of our employees, 714 were engaged in research and development.”
The numbers are crazy. “Our ARR was $351.4 million and $580.4 million in the fiscal years ended January 31, 2020 and 2021, respectively, representing a growth rate of 65%. We generated revenue of $336.2 million and $607.6 million, representing a growth rate of 81%, and a net loss of $519.9 million and $92.4 million in the fiscal years ended January 31, 2020 and 2021, respectively. Our operating cash flows were $(359.4) million and $29.2 million and our free cash flows were $(380.4) million and $26.0 million in the fiscal years ended January 31, 2020 and 2021, respectively.”
Low code, many integrations, multi-tenant. “Our platform is built to be intuitive and easy to use with low-code, drag-and-drop development tools, and interfaces that knowledge workers can understand. We offer hundreds of out-of-the-box, native integrations with a wide range of enterprise applications and productivity tools from our technology partners. We have built our platform to be multi-tenant and deployable across on-premises, private and public cloud, and hybrid environments.”
CEO is a cofounder and controls the company. Daniel Dines is the CEO and co-founder. His salary is only $106k. He controls the company: “Our Class B common stock has 35 votes per share and our Class A common stock, which is the stock we are offering hereby, has one vote per share. Our Chief Executive Officer, Co-Founder, and Chairman, Daniel Dines” owns all the Class B and “will have the ability to control the outcome of matters requiring stockholder approval, including the election of directors and approval of significant corporate transactions, such as a merger or other sale of our company or our assets.”
Employees are worldwide. “As of January 31, 2021, approximately 72% of our full-time employees were located outside of the United States.”
Customer concentration is unclear, but customers are large. “We derive a substantial portion of our revenue and ARR from sales to our top 10% of customers. As of January 31, 2021, we had 1,002 customers with ARR of $100,000 or more and 89 customers with ARR of $1.0 million or more, which accounted for 75% and 35% of our revenue. Customers outside the United States generated 66% and 61% of our revenue as of January 31, 2020 and 2021.”
Channel partners are important here. “For the fiscal years ended January 31, 2020 and 2021, we derived a substantial amount of our revenue from sales through channel partners. Our business partners include more than 3,700 global and regional system integrators, value-added resellers, and business consultants”
Not insignificant layoffs, before Covid. “On October 24, 2019, we announced a restructuring plan focused on reducing our global workforce. We implemented this restructuring plan through the end of fiscal year 2020 and incurred one-time employee and non-employee termination benefits of $9,942,000 relating to workforce reductions.”