The Bengaluru-based company recorded $50 million in annual recurring revenue (ARR)—a key metric for software-as-a-service (SaaS) businesses—from about $20 million in 2021, according to two people familiar with the company’s performance.
The revenue growth for the SaaS-based platform, which provides in-app guidance and performance support for web applications and software products, was on the back of heightened demand of enterprise customers to up employee productivity, reduce training time and costs, the sources said.
A spokesperson for Whatfix declined to comment on the company’s ARR numbers, citing confidentiality.
The startup is also in talks to raise funds, one of the sources cited earlier said.
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Additionally, Whatfix has been developing new large language models and artificial intelligence-linked integrations for its product.
“With the auto-complete and image-recognition features, Whatfix is making it easier for businesses to train their workforces on new applications without any engineering effort,” co-founder and CTO Varak Kumar announced in a blogpost earlier this month.
The integrations come at a time when late- and growth-stage startups are cutting down on innovations to prioritise existing business in the face of slowing funding.
ET had reported last month that SaaS startups have been giving clients a 40-50% discount on large deals to ensure they do not lose out to rivals. This is in spite of Indian SaaS companies having a price advantage over their US rivals. Usually SaaS margins are at 60-70% for the sector.
A new funding round at Whatfix, details of which ET couldn’t ascertain since the talks are still exploratory in nature, would put the company alongside the few enterprises that are still managing to attract investors.
Funding in the enterprise software sector, which includes SaaS platforms and all other software tools sold to enterprises, dropped to $366 million in the quarter ended March 2023 from $2.55 billion in the year-ago quarter, according to data from Venture Intelligence, a deals database firm.
What’s working
Pune-based Gyde.ai, a smaller player in the space, told ET that it has also been seeing good interest from clients over the last quarter.
“Companies have already bought tonnes of software and they want to make sure that it is now getting utilised to the level they are expecting,” said Prasanna Vaidya, co-founder of the Better Capital-backed firm.
Vaidya said Gyde.ai is closing about 10 clients a month, almost double from a year ago. “Maybe the tightening purse cycle is actually helping the space in general, because we have also been seeing a lot of good interest from smaller customers as well as enterprise customers in the last few months,” he said.
Companies such as Whatfix and its competitor, WalkMe, rely on consulting majors SAP and Accenture to better their go-to-market motion. Nasdaq-listed WalkMe, with about $220 million in ARR and about $764 million in market cap at Tuesday’s market close, also echoed Vaidya’s rationale in its quarterly call with analysts in February.
“The bottom line is that the market and organisations are flooded with software,” CEO Dan Adika said. “Purchasing power has shifted to the department trying to solve a tactical need and the business outcome for the whole organisation.”