Each year, Cylynt issues a press release about its year-end results. I took on the task this year.
2020 was a really strong growth year for us, so why am I only writing this in June 2021?
I do not like to do something just by dint of habit, so I asked myself and the team, should we issue a public statement about our results.
We are privately owned and fueled by bootstrapped finance. I consider this a privileged position to be in, as we can keep focused on increasing our customers’ success with our products, rather than preening ourselves so we can strut up and down prior to an exit - a modus operandi that can be the sole focus of some entrepreneurs. With that focus, we build a strong, sustainable, and growing business.
The Cylynt team knows how collectively we did in 2020, as we transparently share that information. Knowing how well we are doing on a number of fronts, including the financial front, is key information for team members, but does the rest of the world need to know?
Some customers might like to know how well we are doing financially as affirmation that they made a wise decision adopting Cylynt’s technology, however, their individual return on investment (ROI) is much more important to them. Our customer testimonials through the individual calls they are prepared to make to our prospective customers are more important to our prospective customers than our results.
It could be that we want to signal to potential acquirers that we should be on their radars. Given my earlier comment about exit focus that is not it either.
We want to hire great people and our results factor into candidate decision-making as part of their due diligence before deciding to join us, but I would argue that scrutiny comes later in the recruitment process as it is: the sector and its prospects and technologies; Cylynt’s strategic direction; our culture and people; and what we do to support our team members and their opportunities for personal growth, that figure higher on their list of to join or not decision criteria.
So the "why" boils down to: we are proud of our achievements and want to share them. But why so late?
Because we want to ensure that 2021 will be an equally exciting year to be able at this time in 2022 to be sharing how proud we are once again that the Cylynt team’s hard work has paid off and our partnership with our customers continues to bear fruit. Of course, a lot can happen in that time, but we are tracking nicely to have the confidence to share our news this year.
Cylynt, not unsurprisingly as a SaaS company, receives subscription revenue from its customers based in part on their usage of the solution. 90% of our revenue is recurring revenue.
During 2020, we significantly enhanced our customer success team and formalized our product management function to ensure our customers achieve their desired outcomes and we consistently deliver exceptional customer value. Overall, nine new valued colleagues joined the Cylynt team during 2020.
The lasting and trusted partnership built with each of our customers generally translates to additional usage of the Cylynt solution as more customer products are instrumented and feed data back from the field yielding more revenue recovery opportunities.
We also have a revenue stream for some clients that prefer more of a risk-sharing approach, where Cylynt shares in the revenue recovered by Clients from their use of the Cylynt solution.
Both revenue streams reflect that Cylynt’s success is bound to client success in recovering revenues that they would not otherwise benefit from. Relentlessly ensuring our customers continue to receive, and exceed, their expected RoI has resulted in our renewals being positive with 2% gross and -12% net churn on CMRR. More on RoI below.
2020 marked another successful year of revenue growth reflecting the growth in customers using the Cylynt solution and their use (and successful outcomes) of the solution. The Cylynt platform continued to be trusted in 2020 by some of the world’s leading software companies for enhanced business intelligence and globally is protecting around $50 billion of software assets.
The data we collect for our customers and our technology facilitates the actionable insights our customers gain from that data has grown at a similar "lick" to our revenue.
Customer Return on Investment
Many software companies struggle with articulating their RoI for their customers using their technology. However, Cylynt is able to quantify the revenue recovered by clients from using its software and naturally we know the revenue we receive from customers representing one of their costs in recovering revenue that they otherwise would not be able to.
At Cylynt, we take that a step further and deduct the average employment costs (cost to company) of all the Cylynt system users across all clients to calculate a more refined return on investment for our customers.
Using this methodology, our current average RoI across all customers is 9:1.
Quality and Profitable Revenue
The pursuit of revenue at any cost may be appropriate for some ‘frothy’ propositions, but not us. We are conscious risk-takers and all too aware, as a bootstrapped company, the danger of being too cautious with investment resulting in insufficient impact.
Therefore, as a leadership team, we like venture capital’s rule of thumb for SaaS growth, the Rule of 40. It is a useful Litmus Test for us in the pursuit of sustainable top and bottom-line growth, recognizing that there is a tradeoff between the two.
Much has been written on the subject of the Rule of 40, but for a quick explanation this link is helpful.
I am pleased to say that 2020 was yet another year solidly above the Rule of 40 for Cylynt.
• To our customers that have put their trust in us and developed a long-term partnership relationship with us;
• Our partners that have supported specialist aspects of technology development and our go-to-market; and
• To the dedicated Cylynt Team for bringing it all together day-in-day-out.