In February of this year, Automattic closed a new primary funding round of $288M, bringing in some great new partners including BlackRock, Wellington, Schonfeld, and Alta Park. Existing investors ICONIQ and Aglaé (Bernard Arnault) also participated. This round was common stock, and like all funding since 2011, included a proxy assigning me the right to vote the shares.
Automattic was very busy during this time frame, as we were working on what would become the Parse.ly, Day One, and Pocket Casts acquisitions, our investments in Element and Titan, plus more acquisitions and partnerships we haven’t announced yet, so we haven’t mentioned the February funding round until now. And while we are a bit surprised the fundraise did not leak to the press, it’s now been an awkwardly long time since February and I’m pleased to formally announce it now.
And since then, Automattic has continued to grow at a rapid pace and we recently took the opportunity to do a $250M share buyback at a $7.5B valuation that just closed last week. The buyback was primarily targeted at current and former employees.
We’ve grown and increased our valuation at a rate higher than most other alternate investments available to investors. However, some of Automattic’s employees and former employee shareholders have been part of our journey for a very long time. Selling a bit of their equity holdings could have a significant impact on their lives.
Automattic was founded 16 years ago and is still private, so it’s important for us to try to provide liquidity to any shareholder who wants it. We do the same with our internal A12 stock plan where we let our employees buy our shares and also offer an opportunity for all holders to sell them back to Automattic, every quarter. (I need to do a longer post on that.)
One interesting thing we’ve been doing in these buybacks is holding the shares as treasury stock within the company instead of canceling the shares at purchase. This allows us to buy shares that come onto the market, and then when an investor comes and wants to put a larger quantum of capital into the company, we can re-sell the treasury shares that the company bought earlier. In effect, we are providing both a sell-side and buy-side for Automattic stock, serving previous and new investors and making money on these trades since we bought and took the risk earlier. We’ve established a logical valuation methodology, which is based on a simple multiple of the last twelve month’s revenue, so shareholders can track and anticipate performance.
All of this has been a lot of fun and we’ve seen a great amount of success, but it’s not all smooth sailing; we still have our share of challenges, probably the biggest being hiring. We have significantly scaled up our ability to find and hire great folks, with 371 accepted offers already in 2021 and it’s only August. However, with the growth of WooCommerce (hiring a Head of Payments) and our enterprise business, WPVIP, in particular, we need to move faster to keep up with the opportunity. For me and many other of the most-tenured Automatticians within the company hiring is the top priority. To that end, I’m also looking for someone to partner with me and our top executive group (which we call Bridge) in Creative Talent Development, an executive recruiter to help craft the highest performing teams of executives for each of our businesses.
We have a multi-decade opportunity ahead of us to create the best solutions for the open web platform of WordPress, and WooCommerce is doing the same thing for commerce; growing together over the long-term with people passionate about the same mission is my favorite part of my job.