SAAS unicorn Exterro registers 30% CAGR, now looking for acquisitions in India

Coimbatore-based SAAS unicorn Exterro continues to go on a buying spree. After making four acquisitions in the last five years, the startup’s CEO Bobby Balachandran said his company now has the experience to pursue “strong inorganic growth strategies,” especially in the data privacy and digital forensics space, where Exterro operates.

“We’ve made four acquisitions and we have a strong track record of integrating and making those acquisitions add to our revenue, growth and profitability,” Bobby told CNBC-TV18 in an exclusive interview. “We have a very good handle on our organic growth and we have significant, deep pockets of cash to make those strong acquisitions.”

The deep pockets Bobby mentions are due to the fact that Exterro achieves operating margins of 40% – astonishing numbers for a SAAS company – on annual recurring revenues ₹2,000 crore. “Our growth rate is also quite significant,” he added. “Our ARR ₹2,000 crore growing by 30% year-on-year.

Exterro has made four acquisitions between 2019 and 2023 — two on either side of the unicorn title it earned in 2022. The latest acquisitions include Zapproved and Divebell, which the startup acquired last year in January and November, respectively. While the company had previously considered India as its primary R&D hub, it has now set its sights on the potential market potential in the country.

“We see India as a huge market,” Bobby said. “It’s going to be a huge market for us in terms of growth — we’re going to open another office in Chennai and have people all over the country.” CNBC-TV18 has learned that Exterro’s board has discussed making “significant” acquisitions in India.

“That combination of organic and inorganic growth will give us the ability to scale,” Bobby added. “But we need to make sure our acquisitions fit our growth and margin strategies.”

Exterro is banking on multiple growth levers to expand in India, including the Digital Privacy Act and the company’s focus on data forensics: “Data privacy, forensics and cyber threats will be key growth segments for us in India.”

But the startup also wants to expand its customer base by selling new products to existing customers. “We expect new customers to account for 60% of our revenue in the medium term, with the rest coming from existing customers.”

It’s no wonder then that the startup is expecting significant deal flows not just in India but in each of the big four markets—the Middle East, Europe, and the US—giving it the runway to invest in talent acquisition.

“We expect to have 400-500 people in our forensic lab in Chennai,” Bobby said. The forensic lab he refers to will see the merger of government, corporate and law enforcement departments under one roof.

With those plans secured and loaded, Exterro’s only remaining step is to go public. The company is considering an IPO in 2025, according to Bobby, but is in no rush to do so.

“Experts tell us that the financing and startup ecosystem will improve in the second half of 2024, but we are convinced that an IPO is a good thing, not a necessary thing,” he said. “We are already running Exterro like a public company, but like this: our goal is to go public by 2025.”