SAAS unicorn Exterro registers CAGR of 30%, now on the lookout for acquisitions in India - CNBC TV18

This article originally appeared on CNBC TV18 in September 2024.

"Between 2019 and 2023, Exterro made four acquisitions—two on either side of the unicorn tag it earned in 2022. Its latest buyouts include Zapproved and Divebell, which the start-up acquired in last year in January and November, respectively."

"We have done four acquisitions, and have deep expertise in integrating and making these acquisitions accretive to our revenue, growth and profitability," said Bobby in an exclusive chat with CNBC-TV18, "We have a very good handle on our organic growth, and we have significantly deep pockets of cash to make those strong acquisitions."

The deep pockets that Bobby refers to come on the back of Exterro returning operating margins of 40%—astonishing figures for a SAAS firm—on annual recurring revenues of ₹2,000 crore. "Our growth rate is pretty significant too," he added, "Our ARR of ₹2,000 crore is growing by 30% year-on-year."

Between 2019 and 2023, Exterro made four acquisitions—two on either side of the unicorn tag it earned in 2022. Its latest buyouts include Zapproved and Divebell, which the start-up acquired in last year in January and November, respectively. While the company has thus far regarded India as its primary R&D hub, it has now set its sights on possible market potential here.

"We're seeing India as a huge market," said Bobby, "It's going to be huge for us from a growth standpoint—we will be opening our next office in Chennai, and have people all over the country." CNBC-TV18 learns that the board at Exterro has discussed making "meaningful" acquisitions in India.

"This combination of organic and inorganic growth will allow us the opportunity to scale up," Bobby added, "But we will need to ensure our acquisitions fit our growth and margin strategies."

Exterro is banking on multiple growth levers to grow in India, including the Digital Personal Data Protection Act and the company's focus on data forensics: "Data Privacy, Forensics and Cyber Risks will be key growth segments for us, in India."

However, the start-up is keen to expand its customer base too by selling new products to existing customers. "We expect new customers to account for 60% of our revenues in the medium term, with the rest being accounted for by existing customers."

So, it comes as no surprise then that the start-up expects significant deal flows not only in India but in each of its four big markets—the Middle East, Europe and the US. This will provide it the runway to invest in talent acquisition.

"We expect to have a headcount of our 400 to 500 at our data forensics lab in Chennai," said Bobby. The forensics lab he refers to will see a coming together of government, corporate and law enforcement departments under one roof.

With these plans locked and loaded, all that's left for Exterro is to go public. The company is mulling over a 2025 IPO, according to Bobby, but it's in no hurry to get there.

"Experts tell us that the funding and start-up ecosystem will see improvement in the second half of 2024, but we are convinced that an IPO is a good-to-have feature as opposed to a must-have one," he said, "We are running Exterro like a public company already, but yes: our target is to go public by 2025."