Rocket Companies buys Truebill for $ 1.275B - TechCrunch
We do hear, however: Why was the agreement not more expensive?
Rocket Companies announced this morning he bought Truebill for $ 1.275 billion in cash.
Rocket Companies is famous for their Rocket Mortgage product, while Truebill is a user-facing app that helps users manage subscriptions, automate savings and budget. The contract price tag will be beneficial to Truebill shareholders. PitchBook data reveals Truebill's last private valuation was $ 530 million after counting its last round. That $ 45 million investment happened earlier this year.
Thus, a quick return more than doubles for Truebill end investors, and an even bigger yield for its previous backers. Not bad, right?
Let's play Please! Sin! Emo!
With Truebill selling for under $ 1.3 billion in hair, you have the information you need to estimate for annual recycling revenue (ARR). Overall, where does the company's mainline end at the end of the year?
If you estimated something around $ 50 million, our heads are in one place. Technical values are high despite some recent declines, and fintech is hot. So, multimedia in the mid-20s felt like a good measure.
Wrong. Here's a rocket (emphasis added):
This new line of business will generate a steady monthly income for Rocket Companies. Today, monthly payments made by clients to the company's mortgage servicing activity generate $ 1.3 billion in servicing revenue annually. Rocket Companies has 2.5 million serviced clients and has an industry best retention rate of 91 percent. Truebill is on track to generate $ 100 million in annual recycling revenue. That number is growing steadily, with 2022 revenues more than doubling in 2022 revenues.
Hot dang. That's a surprise.
Truebill is set to close out this year with nearly twice the ARR we expected. And even more, the company is doubling in size every year. That's exactly the image that companies want to raise before they go public: huge revenue and fast growth. And yet instead of being public, Truebill sells itself for less than 13x the standard ARR. That number will tighten over time, to the single numbers in 2022, as long as growth can sustain at Truebill in the new year.
It feels a bit cheap, really.
The full cash deal means Rocket may have received some sort of discount; shares are cheaper than cash, and Truebill could have raised another $ 100 million if the deal had been, say, 50% stock. We are talking in numbers very loosely, mentally.
However, the deal is good news of sorts, but also an omen. Why did ~ 100%, nearly nine-figure ARR fintech grow just sell for scarce unicorn money? As mentioned, the price means a sweet, sweet holiday liquidity for Truebill fans, but for other fintech companies that may have received an unwelcome comp for the holidays, it's not. the numbers are bullish. They feel a little soft, honest.
We may be seeing the impact of Nubank's rather slow IPO. Or it could just be a general downturn in many software we've seen recently. Or is there something inside Truebill that is fortunate - it may have far greater sales and marketing costs than we might expect; attaching itself to Rocket could reduce consumer construction costs, possibly improving its economic image.
Nonetheless, we will get more data when Rocket reports on its first full quarter introducing Truebill. The agreement is expected to close this year.