‘We are looking at the next target which is to be a $1 billion ARR firm in the next 4-5 years.’
Photograph: Kind courtesy Icertis
Icertis, which is headquartered in Bellevue, United States, and is based in Pune in India, recently said it has earned $250 million in annual recurring revenue (ARR).
Monish Darda, chief technology officer and co-founder of Icertis, says going from $50 million to $250 million ARR was the “hardest” for his company that provides contract lifecycle management (CLM) services.
In a video interview with Shivani Shinde/Business Standard, he talked about the company’s next milestone and the impact of generative artificial intelligence (GenAI).
What is the next milestone for Icertis after $250 million in ARR?
Our journey has been very interesting. We started when CLM was very fractured and a category that was into document management.
But now it is all about contract intelligence.
The first $50 million ARR is hard, but the journey from $50 million to $250 million is the hardest.
This is also where 90 per cent of startups fail to reach that point.
After $250 million it’s all about execution. We are looking at the next target which is to be a $1 billion ARR firm in the next 4-5 years.
We are grateful that so many factors came into play to make this happen.
We went through a tough phase during Covid… content lifecycle management as a category came out very strong and businesses realised it is not only about compliance and risk.
It’s also about cost, digital transformation and also about business continuity to run in the worst possible scenarios.
End of last year (Microsoft chief) Satya Nadella visited our leaders and he and Sameer (Bodas, chief executive officer and co-founder of Icertis) did a fireside chat.
He (Nadella) said two things.
One you cannot keep doing what you did over the last 10 years for the next 10 years as well.
You need to do something different to be successful. We had already started to think about the $1 billion journey and this helped.
Two, don’t ask people to change but you change. So if we can say over the next 10 years that we have managed to build a Salesforce from India, we would be extremely proud.
What will drive the $1 billion ARR target?
When you have to grow to that number there are two critical elements.
First is the total addressable market (TAM) available to grow to that size or what are the growth engines.
For us that is not a problem, because 33 of the global 100 are our customers, which means we still have 77 more to reach out to.
We have a market. Second is execution and for (that) we need a good team.
Over the last six to 12 months we have worked on this. We have a new CFO (chief financial officer), Rajat Bahri; he joined more than a year back.
We got a new CMO (chief marketing officer) Jay Lee who joined a couple of weeks ago.
He is among the management only ones who has seen a $1 billion scale. Neither me or Sameer has seen this scale from a marketing sales perspective.
We appointed a COO (chief operating officer), Anand Subbaraman, who comes from BrowserStack.
We got a new head of products, Abhishek Trigunait from CA Associates. Neeraj Athalye will lead the Asia Pacific business and is a SAP veteran.
This also means we need to focus on our major markets, expand into other markets and double down on building on our partnerships like Deloitte, PwC, Wipro etc.
Is the company looking to raise funds or acquisition to grow?
We have enough dry powder, not looking to raise now. Acquisition will be an important route for us to reach the $1 billion ARR.
Inorganic routes will be used to fill in white space in the technology and vertical spaces.
Over the past five years the CLM space has also changed. For instance, over the last two-three years there has been a rise in legal tech startups.
But these players are facing existential issues with GenAI. So many will be on the block. They make good potential for acqui-hire kind of opportunities.
How has GenAI impacted the CLM segment and opportunities?
It has had a significant impact on the CLM sector. GenAI has killed the traditional CLM work.
What used to be the bread and butter of traditional CLM companies such as generating a clause or discovering or interpreting a contract, all of this is table stakes now.
There is a lot of research and investment going on. In the next six to 12 months all of this will further evolve.
How has GenAI impacted Icertis?
We do contract creation, negotiations and signing very well.
But now how do I use GenAI to leverage the data that we have across all verticals and regions and build a common understanding of the contract and deliver an enterprise system that will allow us to convert into intent.
For us AI has allowed us to bring the intent of the contract in the real world.
Icertis Copilots is one of the fastest growing products in the history of the business, it is also the first generative AI application for enterprise contract management.
We have managed to unlock one of the most powerful sources of enterprise data: The commercial agreements that drive business.
In 2023, three out of every four deals included Icertis AI products.
Can you quantify the impact of GenAI to your revenue?
The contribution of GenAI in the $250 million ARR is probably very small but the potential it has and the doors that it opens for existing and new customers is very high.
This is the first significant step in turning Icertis and contract lifecycle management into an AI-first domain.
Feature Presentation: Aslam Hunani/Rediff.com
