When an app isn’t working right, it becomes apparent very quickly. First, people start complaining on Twitter. Then the app’s ratings start to tank. So how does an app developer get out of this hole?
For many, the answer is becoming Applause, the Framingham-based app quality and testing company (f.k.a. uTest) that’s been scooping up some of the world’s largest brands as customers. Those include Coca Cola, Amazon and BMW, three companies added last year that represent the diversity of its more than 3,000 customers. Other big names on the client list include Google, Netflix, HBO and Microsoft.
As Applause continues to find traction and grow its international headcount, CEO and co-founder Doron Reuveni told BostInno the startup could be ready to file plans for an initial public offering as early as the second half of this year or the beginning of 2017. He said the company is on track when it comes to achieving ideal unit economics, and it’s also on track to reach an IPO-appropriate size in revenue by the end of the year. (Applause has been one of our IPO predictions for 2017.)
“As the company continues to grow worldwide we want to grow a company for the generation, and an IPO is a milestone along the way,” Reuveni said, offering the caveat that the timing of the IPO will also depend on the overall health of the market.
Applause has raised $80.8 million in funding so far. Investors include Goldman Sachs, Longworth Venture Partners and QuestMark Partners.
“As the company continues to grow worldwide we want to grow a company for the generation, and an IPO is a milestone along the way.”
Applause has previously reported that its revenue in 2014 was $38 million, and Reuveni said that revenue grew between 40 and 50 percent in 2015, though he declined to provide a specific figure. Based on the percentage range alone, that would’ve put the company’s 2015 revenue between about $53 million and $57 million. But Reuveni said the revenue alone doesn’t paint the whole picture, adding that the company ended last year with a booking run rate that was in excess of $100 million.
On the hiring front, Reuveni said the company plans to add more than 50 employees in 2016. They’ll join Applause’s current staff of about 260 people, roughly half of which work at the company’s Framingham office (the rest work in locations including Germany, Poland, Israel and Seattle). The company’s hiring efforts will mainly focus on marketing and sales, especially enterprise sales, with people being added in both the U.S. and Europe.
Reuveni said among the company’s highlights from 2015 was getting its first customer to book more than $10 million. He said the it had five other customers last year that each brought in over $1 million.
Another major milestone last year was the relaunch of its website for uTest, what was the company’s original name before it renamed to Applause in 2014, and what now acts as a “LinkedIn for app testers” community, providing testers with a list of paid testing opportunities, along with free training and custom-tailored content and discussion forums.
“Our metrics around usage and adoption have gone through the roof,” Reuveni said of uTest.
The company also launched its mobile and Web test automation service, as well its its mobile beta management tool, which helps app developers manage large groups of users during an app’s beta stage. Reuveni said both products are already contributing to the company’s top line.
One other area Applause has been focusing on, Reuveni said, is how to accommodate the growing number of companies that need app testing for various Internet-of-Things devices. While the Internet of Things represents about 5 percent of the company’s revenue right now, he said, the business is about 15 times larger than it was the previous year, and he expects it to continue to grow significantly. The company is now doing app testing with devices such as interactive TVs, video game consoles, smart cars and wearables.
“That created a challenge to have us adapt from educating our community as well as adapting our software technology,” Reuveni said.
“It’s not a surprise that they’re paying significant attention to what users are saying about.”
In addition to growing its Internet-of-Things business, Reuveni said the company also plans to grow its strategic partnerships, of which there are currently five. One of the partnerships is with IBM, which sells three of Applause’s product lines as IBM-branded mobile software quality solutions. The company also has a reselling agreement with global IT consulting giant Cognizant. Reuveni said the strategic partnerships represented about 10 percent of its revenue last year, and he hopes for that to double this year.
“That’s a great scale to our business moving forward,” he said.
To illustrate what kind of impact Applause can have on app developers and other customers, Reuveni cited one example where a large retail brand had an app with a 2.5-star rating because it had a poor user experience. Within a 3 to 6 month period, he said, Applause was able to help the company with its testing services and bring the app to 4.5 stars.
Because consumers can switch what app they’re using with a few swift taps, Reuveni said the stakes are higher for companies when it comes to the quality of their apps.
“It’s not a surprise that they’re paying significant attention to what users are saying,” he said.