There’s Gold In Them Surveys (Worth $1.35 Billion)
Raise your hand if you dutifully fill out every survey you get.
That’s what I thought.
SurveyMonkey, a provider of web-based surveys, is thriving though, with 65 million monthly visitors visiting its website to respond to, create and in some cases just gawk at its surveys.
What is all that activity worth? A valuation of $1.35B, based on the latest round of financing that SurveyMonkey is raising from a who’s-who of companies and investment banks:
On Thursday, the company announced a $444 million fund-raising round that it closed in December, drawing in investors like Google and the hedge fund Tiger Global Management. And it plans to raise $350 million in debt, in a round led byJPMorgan Chase.
Naturally, one wonders about the viability of the business model, how the company makes money and the other stuff that follows such an eye-popping valuation.
While it was difficult to find all the details, its apparent that SurveyMonkey has three things going for it:
- It offers an unglamorous but essential service for all types of businesses (I have both created and responded to SurveyMonkey surveys)
- Users seem to love it. As far back as 2011, it had 8.5 million users (creators of surveys, I assume). Today, that number is 14 million. That’s some pretty significant growth.
- And how do they make money? Via the well trodden “freemium” model. So they give away their basic product for free and then charge for advanced analytics and reporting, as you can see in the graphic above.
Per the DealBook article excerpted above, it has 360,000 paying customers that pay anywhere from $17 a month to $65 a month. Assuming that the average customer pays $32 a month, that’s 360,000 * $32 = $11.5m a month, or $138 million of operating revenue a year.
Since the company itself is run quite leanly and the IT infrastructure delivering all of these surveys is likely not that expensive, I would guess that they generate at least $100m in operating income a year.
Not bad for a survey purveyor…
Well, what do you know?
Looks like the average revenue per paid customer is a bit less and SurveyMonkey’s 2012 revenue was $113m, with an EBITDA of $61m.
Those numbers make the $1.35B valuation that much more impressive, even on a DCF basis…clearly everyone thinks that there is an enormous amount of additional growth that will be realized in the years to come.
The Reuters article with the revenue data: http://www.reuters.com/article/2013/01/17/us-venture-funding-surveymonkey-idUSBRE90G1GB20130117