Procuri: Digging Under the Numbers

It's good to see private companies doing well. While I would have like to have seen some more specific customer and revenue numbers announced in their latest press release, Procuri's latest metrics appear solid indeed, although what they're not telliing usmight be as insightful as what they are choosing to include. But the good news is that as I look at these numbers and back into Procuri's revenue, the fundamentals are looking more solid than before. However, if Procuri has any hopes of going public in the next 18-24 months -- as the outside investors are no doubt hoping for -- they will need to find ways to augment the growth of their conservative, SaaS revenue model. Some ways of doing this might include pulling forward revenue streams by introducing new sources of services or license-based revenue. Another option would be to "buy" growth through acquisitions.

But should Procuri pursue these strategies on their VC's schedule or their own? From a fundamentals standpoint, Procuri is doing everything right -- signing long-term deals, recognizing revenue over the complete contract length, focusing on customer satisfaction, etc. At the same time, though, I wonder if this conservative growth strategy will appease outside investors with their own set of expectations and needs. Emptoris presents a contrasting case to Procuri (although they're also a vendor with similar outside investment).

As many of you know, Emptoris was founded on the traditional approach of selling large high six and seven figure deals, pulling forward at least part of the revenue for licensed deals to show a traditional software growth curve (with some smoothing on the back-end from some deferred revenue). In addition, Emptoris has augmented this organic software growth strategy with sizable acquisitions along the way that contributed to significant year-over-year revenue growth. I speak of Zeborg and Dicarta here specifically.

Procuri, in contrast, has made acquisitions with less of an impact on absolute revenue (though one could argue that their deals were just as strategic). TrueSource here is a case in point. When Procuri acquired this spend analytics vendor, they were tiny from a revenues perspective, but offered a great up-sell and cross-sell opportunity in the Procuri base -- not to mention giving Procuri an opportunity to get into more suite-based RFPs. In addition, CMSI proved a smart move as well – not the least of which is how it ultimately formed the basis of two Procuri products, TotalContracts and TotalSupplier. Incidentally, the latter of these solutions appears to be morphing into a hybrid portal / performance management solution, according to Procuri's latest press release.

Without question because of organic growth and smart deals like TrueSource and CMSI, Procuri's future is looking bright. This is also evidenced by their latest growth news and from what I'm hearing on the street. But let's hope they stick to their knitting, opting for sustainable and conservative growth over a near-term pop. Their customers -- and the market -- will be all the better for it.

Jason Busch

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