2016 IPO Prospects: MuleSoft is a Unicorn, but Detailed Financials Remain Unknown

According to a MarketsAndMarkets research report, the global enterprise application integration market is estimated to grow from $7.85 billion in 2014 to $13.35 billion in 2019. That translates to an annualized growth rate of 11% over the five year period. Last year, San Francisco-based MuleSoft was hoping to become a Billion Dollar Unicorn in the industry. And, it did.

MuleSoft’s Financials

The idea of setting up MuleSoft came to Ross Mason when he was working at a bank and realized that projects involving integration of technology were not only expensive, but also complicated. He was also influenced by a master’s graduate paper by Matt Welsh that talked about staged event-driven architecture that could be used to build high-scale web services and in a few years had founded MuleSoft. After quitting his job in 2003, Ross was offered to work on a project by his employer’s partner to build a campaign management system for charity donations that could process transactions whether they cam through email or through SMS and also offer follow-up marketing campaigns. In the next four months, Ross built that project and laid the basic ground work for MuleSoft.

Today, MuleSoft provides the platform for simplifying and accelerating the way businesses connect through Anypoint Platform’s API-led connectivity approach. It is helping organizations transform their business by enabling them to deliver mobile customer experiences and turn data into digital assets, and accelerate their pace of innovation and change.

MuleSoft set up shop as an open source platform before transforming to a subscription fee-based model. The company also earns revenues through support, consulting, and training related services. When I spoke with Ross two years ago, he mentioned how MuleSoft’s service organization focuses on high-value services to guide customers in the right direction instead of delivery services. Its service segment delivers high level services such as architectural reviews, enablement services and workshops, and foundation that helps customers get their software development in order for agile development. It has an impressive customer list of over 700 organizations with names such as Unilever, Walmart, MasterCard, eBay, and Verizon to boast of.

MuleSoft does not disclose much financial information. It does report that it delivers strong top line growth. In fiscal 2014, its annual run rate of bookings is expected to have crossed more than $100 million. The company ended last fiscal with revenues of more than $100 million and an enterprise customer base of over 900 organizations. Profitability details are not known.

It was bootstrapped initially, but has raised $259 million in funding so far from investors including Morgenthaler Ventures, Hummer Winblad Venture Partners, Lightspeed Venture Partners, SAP Ventures, Bay Partners, New Enterprise Associates, Salesforce Ventures, Meritech Capital Partners, Cisco, and Salesforce.com. Its last financing round was held in May 2015 when it raised $128 million led by Salesforce Ventures at a valuation of $1.5 billion. Prior to that round, it had raised $50 million in May 2014 at a valuation of $800 million.

MuleSoft’s Enhanced Offerings

To continue to gain market share, the company has been enhancing its products. Last year, it upgraded its Anypoint Platform to include DataWeave – a new data transformation module and Anypoint Management Center, a single-pane-of-glass management console. Weave, powered by JSON, focuses on querying and transforming data by offering a more elegant and re­usable code. It supports transformations including one-to-one mappings to more elaborate mappings such as normalization, grouping, joins, partitioning, pivoting and filtering. It also features an advanced tooling and graphical interface that allows users to leverage metadata from connectors, schemas, and sample documents to more easily design transformations.

The new management console allows for management of hybrid deployments from a single interface. It uses the core Mule runtime engine for integration and API management and delivers a unified view for all integration applications and business groups. Organizations are also able to receive full visibility into API metrics, message traffic, and back-end integrations.

MuleSoft also launched an exchange where developers can share their best practices and modules across their organization.

MuleSoft plans to go public some time in the near future. But for now, it does not want to commit to quarterly short-term goals that a public company has to follow. According to a Forrester research, US companies will spend nearly $3 billion on API management over the next five years with annual spend quadrupling by the end of the decade, from $140 million in 2014 to $660 million in 2020. While the market is dominated by CA Technologies, IBM, and Microsoft, other start-ups are making their presence felt. Apigee (NASDAQ: APIC) is a close competitor for MuleSoft and went public last year. With revenues of $68.7 million for fiscal year 2015, Apigee is currently trading at a market capitalization of $171 million. MuleSoft has shown that it is a much bigger company than Apigee, clearly justifying its higher valuation.

This segment is a part in the series : 2016 IPO Prospects