Paddle acquires ProfitWell for $200 million to bring analytics and storage tools to its SaaS payment platform.

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On the back Paddle promotion $200 million at $1.4 billion valuation Last week, the London-based startup made a key acquisition to expand the functionality of its payment platform for SaaS companies. He acquired ProfitWell, which has created a popular toolkit to provide analytics and storage tools to companies that sell their products on a subscription basis. Paddle buys technology and products, and an interesting user base: ProfitWell says it has over 30,000 customers, including world famous SaaS services such as Canva, Hubspot, Notion, Zenefits, Prezi and Autodesk, which have now become Paddle customers .

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The deal is valued at more than $200 million, Paddle said, in a combination of cash and equity. Paddle itself has about 3,000 clients; in addition, he gained some notoriety for being a fly in the ointment for Apple by creating and preparing to launch (provided that Apple opens its platform or is authorized) an alternative to Apple’s own payment flow in apps for iOS publishers. who want more direct control over their subscriptions and billing.

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“Paddle and ProfitWell share a common goal: to maximize the revenue of our software clients by taking care of the operational and financial hurdles that require unnecessary time and labor. Both companies are committed to “doing it for you” and not just helping you solve this problem,” Paddle CEO and co-founder Christian Owens said in a statement. “That is why we are pleased to announce the acquisition of ProfitWell. By building the number one product for subscription metrics in the marketplace and building on our reputation as a renowned authority on revenue growth in the $400 billion SaaS industry, ProfitWell will greatly add value to our offering. We are thrilled that Patrick and his team are helping us fulfill our mission to auto-start and grow our SaaS business.”

Boston-based ProfitWell appears to be up and running, bringing its co-founders, including CEO Patrick Campbell, a healthy profit. All of the startup’s employees will join Paddle, with Campbell becoming Paddle’s chief strategy officer and another co-founder, Facundo Chamut, becoming the startup’s chief product officer.

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The deal underscores Paddle’s commitment to building a better platform for its core payments business. This is a very classic scenario for a payment company, not only because digital payments remain a low-margin business; but because providing a wider range of services associated with these payments helps to diversify revenues and creates a larger ecosystem of products to help retain customers and keep them loyal.

This is also the path payment giant Stripe is taking as they expand their services (most recently: app marketplace launch in addition to Stripe’s own products). In the case of Paddle, ProfitWell provides a company with a fairly complete set of services designed for SaaS business: along with the main payment product, it will offer taxes, billing and reporting, and now also retention and pricing analytics – all services that SaaS-based companies need. run their subscription business and reduce customer churn, but not necessarily the “core” for the technology they themselves create to sell to others.

The retention problem (and its downside, churn) is a big problem in the SaaS world: there has long been an aspect of subscriptions where users enter payment details once and actively, but also sometimes inadvertently forget to pay again, turning them into repeat customers.

But as the market matures and we find ourselves in a tougher phase of the economy and spending, some will want to step away from that and take on a more active role in managing costs.

“At ProfitWell, we are committed to accelerating revenue growth for some of the most exciting and forward-thinking businesses on the planet, and by joining forces with Paddle, we see an opportunity to do even more,” Campbell said in a statement. “Paddle shares our mission to help thousands of software companies avoid the operational hurdles that stand in the way of growth by taking full responsibility for these challenges. These shared goals, combined with the natural cultural fit between our two companies, meant that adding our subscription metrics and retention tools to the offering made sense. We are thrilled to be able to bring our teams together to create a truly cohesive and powerful payment infrastructure at the heart of the SaaS market.”

Interestingly, while ProfitWell’s products (its flagship service is called Retention) are focused on analyzing millions of data points to help their clients identify when someone is at risk of leaving and provide the tools to prevent it, the product itself is not valued. on that premise, but on a pay-as-you-go model not unlike AWS: base tariff for the service is zero, with customers paying only when the revenue is returned. (It also offers recognized revenue reporting tools and “Smart Pricing” to help companies analyze and set more accurate and successful subscription pricing for customers, and these are price is per month)


Credit: techcrunch.com /

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