Over time, the company would reduce professional services to about 33%.Īriba’s growth was remarkably efficient. At this point in time, Ariba generated 56% of its revenue from professional services, which dramatically depressed because margins. Over time, as the company began to serve larger customers and began offering customization of their procurement software, the gross margins dipped reaching its nadir in 2006, at 46%. Another unique characteristic about the story of Ariba: the founding team was seven people.Īt the outset, Ariba sustained very high gross margins, in the low 80 percent range. In particular, Ariba sold software to run RFPs, manage contracts with suppliers, analyze corporate spending and ensure financial compliance. It sold software to help businesses buy the things they need in order to operate, everything from pens to planes. Ultimately, SAP acquired the company in 2012 for $4.6B.īefore its acquisition, which was consummated at the highest historical multiple of any software company, Ariba was the largest independent procurement software business. At its peak, the company would be worth $40 billion, but after the dotcom crash, the share price returned from the stratosphere to normal levels. In a three-year period, the company had grown 33x and achieved an astounding CAGR of 224% over the same period.Īriba shares increased 300% on its first day of trading at IPO, valuing the company at $6 billion. $8 million, then $45 million, then $274M. In its first year of selling, the company generated $800,000 in revenue. Ariba went public in 1999 three years after having been founded.
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