Gong Surpasses $300M ARR: IPO Potential?

Gong Achieves Significant Revenue Milestone

Gong, a company specializing in revenue forecasting through analysis of potential sales, has exceeded $300 million in annualized recurring revenue (ARR). This achievement was publicly announced by the company on Wednesday.

Leveraging AI for Growth

Established in 2016, Gong utilizes artificial intelligence to examine interactions with customers. The integration of generative AI features in recent years has been a key driver of the company’s expansion.

“We are experiencing substantial progress and are pleased to disclose these figures,” stated Amit Bendov, CEO of Gong, in an interview with TechCrunch.

Valuation and Market Positioning

Gong’s most recent valuation stood at $7.25 billion following a $250 million Series E funding round in 2021. This round was spearheaded by Franklin Templeton, with contributions from Coatue, Salesforce Ventures, Sequoia, Thrive Capital, and Tiger Global.

Numerous companies that secured funding in 2020 and 2021 received valuations that now appear inflated when considered against their revenue. Many are currently facing challenges in justifying these earlier assessments.

Based on the $7.25 billion valuation, Gong’s current ARR suggests a valuation multiple of approximately 24 times ARR. This places the company alongside leading, closely monitored AI-focused businesses.

Comparison to Other AI Startups

However, Gong’s valuation might still be considered high compared to some newer AI startups demonstrating exceptionally rapid growth. For example, Anysphere, the developer of the AI-powered coding assistant Cursor, was recently valued at 25 times ARR.

Anysphere achieved $100 million in ARR from a significantly lower base in under a year. (Faster growth rates typically result in higher valuation multiples assigned by investors.)

Revenue Growth and Customer Base

While Bendov did not disclose Gong’s specific revenue growth rate, he indicated it aligns with the performance of “top-quartile public SaaS companies.” According to the Bessemer Ventures Cloud Index, these leading cloud companies exhibit annual revenue growth between 25% and 56%.

Gong’s extensive customer base includes prominent organizations such as Canva, Google, LinkedIn, and Square, as noted by Bendov.

Future Plans: IPO and Funding

Gong’s current ARR and growth trajectory suggest a potential path towards an initial public offering (IPO). Bendov acknowledged that going public would represent a significant achievement, but clarified that it is not currently planned for 2025.

“An IPO is certainly of interest, but our primary focus remains on developing exceptional products,” he explained.

Regarding further venture funding, Bendov stated that Gong is approaching profitability and retains a substantial portion of the capital raised in its 2021 funding round. “We have barely utilized those funds,” he added.