As we close our third year of selling, it’s my privilege to peel the curtain back from another 12 months of stellar business performance and to help explain how VAST is rewriting the playbook on how startups are built. Let’s start by reviewing the big highlights that we revealed in today’s press release:
- Exited year 3 with a bookings run rate of nearly $300 million at 90% gross margin, 3.8x YoY sales
- Cash-flow positive since the last funding round, powered by a $1.2 million average selling price
- Net Revenue Retention (NRR) of over 300%; recommended by 100% of customers surveyed
- VAST is rapidly becoming the data foundation for a $400 billion AI Data Platform opportunity
Now, we’re not yet a public company… but as time goes on VAST is attempting to operate with more and more transparency such that the evolution to becoming a publicly traded corporation is an easy one. We already share our financial results with our large customers and partners as a matter of course in our business, but I think the aspect of momentum releases that is often lacking is the context, so I’ll try to put things into perspective in my post today.
Building An Unprecedented Software Company Success Story
To put things into context, I’m going to use a very popular index that many people view as a macro benchmark for successful public SW companies, the Bessemer Venture Partners Cloud Index – a tracker for the top 76 public cloud and SaaS companies. Over a long enough time – the leading software and SaaS companies answer to numbers, so let’s just lay them all out:
|BVP Cloud Index||VAST Data FY22|
|Avg Growth Rate||1.4x||3.8x|
|Net Revenue Retention||115%||303%|
sources: BVP.com as of 2/28/22, PublicComps.com
Now, consider that the BVP index is a mix of both newer (Snowflake, UIPath) and older (Adobe, Salesforce) tech companies and as these organizations get to a certain level of critical mass, not all fundamentals are comparable. For example, investors will sometimes point out that concepts such as average growth and even NRR can be especially high when comparing to larger mature organizations. This is, however, where our ~$300M annualized bookings magnitude and cash flow come into play. To put things into perspective, below you can see a comparison between several prominent public software companies (high growth) and where VAST ended its fiscal 2022. Since revenue can be misleading between SaaS companies (which pay big dollars to cloud providers resulting in a high cost of goods) vs software, I’ve focused the conversation on Gross Profit dollars created in a year as well as remaining performance obligations (profit yet to be billed and invoiced). As you can see, VAST is entering into a very interesting pantheon of leading SW players:
Maybe the most impactful data point is the juxtaposition of growth and cash efficiency. We’ve only added to our cash war chest since our Series D was announced in May 2021. This hypergrowth (without massive cash burn) is a function of our customer ASP being so much greater than an average software company’s ASP – such that we simply don’t need to build the same scale of a sales and marketing team as other companies would to meet this target. As we roll into the new year, we’re expecting this trend to continue and we’ll manage our finances such that we have an infinite runway.
NRR Lays The Foundation For Sustained Growth
NRR is a metric that tracks the average amount of investment a customer makes at the end of the year vs when they entered the year after accounting for churn. When we consider that VAST’s NRR is 300% vs the 115% that is average across the BVP index, our ‘land and expand’ strategy is critical to laying the foundation for future growth. Here’s an example of our land and expand strategy in action at a leading automotive company. This is one of our awesomely supportive customers who to date has placed 23 orders for Universal StorageUniversal Storage is a single storage system that is fast enough for primary storage, scalable enough for huge datasets and affordable enough to use for the full range of a customers data, thus eliminating the tyranny of tiers. software:
With this type of customer uptake, our business is just easier to grow. As VAST takes market share, we have the fortune of working in markets where customers are experiencing explosive data growth and this becomes the propellant for NRR. Our larger customers now have over 100PB (each) under management and many are experiencing 2x to 4x annual data growth.
Make Customers Happy.
Happy Customers = Happy Life.
Data growth is not the sole contributor to our story…without a robust, and rock-solid product, customers and partners would not entrust exabytes of their data to our software. Here, we’ve achieved industry-leading software uptime on a platform that is already beyond 6-9s of availability in our customer base, all while powering systems that are, on average, over 10PB in size. This combination of scale and resilience is also very unique – where most organizations have historically accepted uptime issues when dealing with large data sets. VAST is breaking the tradeoff of scale and resilience with its Disaggregated and Shared Everything (DASEThe VAST DASE (Disaggregated Shared Everything Architecture) disaggregates (separates) the storage media from the CPUs that manage that media and provide storage services. This disaggregated storage, including all the system metadata, is shared by all the VAST Servers in the cluster. DASE allows use...) Architecture, and the resulting robustness is complemented by a rigorous quality assurance agenda that is supported by a ~$40M testing lab we’ve put together.
The proof is in the pudding. In January, our customers provided anonymous survey results via the Gartner Peer Insights program. Here, we were delighted to find that 100% of customers surveyed would recommend VAST to their peers. Over a few dozen reviews, here are a few of the quotes we really liked:
If you make a good product, customers will want to buy more. Happy customers are also generally happy to give references, which makes it easier to sell to new customers. Then all you need is a big market…
Sell Into A Big Market
According to ARK Invest’s 2022 Big Ideas Report, data infrastructure for deep learning will represent a $400B market opportunity by 2030. The value of AI will transform entire industries and result in massive efficiency gains around the world – and to get there the amount of investment required to develop and optimize deep learning algorithms will propel the demand for more deep learning data software than the analyst consensus calls for. We’re starting to see a glimpse of these large investments in environments such as OpenAI, Facebook, Tesla, Google and more broadly as AI adoption becomes democratized across the enterprise.
The ARK report is a fascinating view into what could be the future of the deep-learning-powered economy. Here’s some interesting vignettes grabbed directly from the report, which illustrates the potential impact of AI on the economy as well as the resultant uplift that is expected for deep-learning optimized IT software and hardware.
And for our next act…
Before we look forward – let’s recap where we’re at today:
- Updated the company growth story that is VAST, building upon an impressive bookings run rate
- Growth is a function of happy customers that grow quickly into VAST software as their data grows
- We’ve built a platform to tackle the largest IT market opportunity in history: deep learning
- Our unique approach to cash and company efficiency is creating infinite company runway
So, what’s beyond infinity? Well, 2022 is stacking up to be a very, very exciting year for VAST as we look to take the covers off of the grand product vision that we’ve been working toward for several years. We’re partnering with several of the world’s largest organizations who are pioneering new AI use cases and driving toward a synthesis of multivariate data sources to achieve the greatest level of insights.
What will we announce? A picture says 1000 words, so we’ll leave you with this 🙂
Finally, I’d like to say thanks to everyone who supported us this past year. It sounds cliché, but the work we do is not possible without having the best customers, partners, investors and employees. We’ve been fortunate to surround ourselves with the industry’s brightest collaborators – and we greatly appreciate the opportunity in front of us.
On to the new year… bigger. faster. stronger…