# Ngrok Financial Model

Developer-first network connectivity platform that gets any system online in one line of code.

- Canonical: https://finamodel.com/startups/ngrok
- Excel download: https://finamodel.com/startup-models/ngrok.xlsx
- Category: Dev Tools
- Model type: SaaS ARR / Valuation
- Funding round: Series A
- Funding: $50M
- Founded: 2022
- Geography: Global (ISV docs across Google, Microsoft, GitHub, Amazon; international developer base implied).
- Customer: B2B

## About the company

ngrok lets developers expose services behind firewalls, NAT, and unreliable networks through a simple command that creates a secure internet tunnel. It has expanded from developer tunnelling into production edge infrastructure covering acceleration, load balancing, authentication, authorisation, encryption, and observability for apps, hybrid IT, and IoT.

The company uses a freemium, product-led subscription funnel with no paid marketing and no prior outside funding. Free accounts convert to paid plans, although tiers and ARR are redacted. Recommendations in Google, Microsoft, GitHub, and Amazon documentation reinforce the organic distribution channel.

ngrok reported 5.4 million accounts, 4,000 daily signups, and 30,000 paid customers. In April 2022, 18,032 accounts started a tunnel within 60 seconds of creation. The model should forecast activation, free-to-paid conversion, plan mix, edge usage, infrastructure cost, expansion, churn, and support.

## What's included

- 5-year monthly revenue build with stage-appropriate growth assumptions
- Full P&L, headcount plan, and operating-expense schedule
- Cash-flow statement, runway, and burn-rate tracking
- Valuation via exit multiple with a DCF cross-check
- Returns analysis with MOIC and IRR
- Unit economics including CAC, LTV, payback, and cohort retention

## Product & value proposition

ngrok solves the problem of web services being unreachable behind firewalls, NAT, and unreliable networks. The product provides a single CLI command (`ngrok http 80`) that creates a secure tunnel exposing localhost to the internet. The platform expands from dev-time tunneling to production-grade edge infrastructure ("ngrok edge") covering acceleration, load balancing, authentication, authorization, encryption, and observability. Use cases span apps, B2B networks, hybrid IT, and IoT devices. Tagline: "Online in One Line".

## Market

- TAM: $73B. No SAM/SOM breakdown or source/methodology provided.

## Revenue model

- Freemium developer funnel: free accounts convert to paid plans. No pricing tiers or plan names disclosed in deck.
- $0 CAC / no paid marketing - entirely product-led growth (PLG) with organic word-of-mouth and ISV documentation recommendations.
- Fully customer-funded prior to this raise ($0 raised before this round).
- ARR figure intentionally redacted on slide 4 (shows "$__ million ARR" with the number obscured).
- Revenue stream appears to be subscription/seat-based SaaS given "paid customers" language, but specifics not disclosed.

## Traction & metrics

- 5.4 million total accounts
- 4,000 daily sign-ups
- 30,000 paid customers
- ARR: redacted - "$__ million ARR" shown but number blacked out
- 18,032 accounts started a tunnel within 60 seconds of account creation in April 2022
- Over 100 recommendations in leading ISV documentation (Google, Microsoft, GitHub, Amazon)
- Over 600k independent references online
- Implied free-to-paid conversion rate: 30,000 paid / 5.4M accounts = ~0.56%

## Unit economics

- CAC: $0 - explicitly stated, no marketing spend.
- Implied: extremely high gross margins typical of developer infrastructure SaaS (no hardware, pure software delivery).

## Competition / moat

Three moat pillars explicitly stated:
1. **Time To Value**: 18,032 accounts activated within 60 seconds of signup (April 2022 data point) - extremely low friction.
2. **Developer network**: 5M+ developers, 4K daily signups - scale creates brand lock-in and habit.
3. **ISV embedding**: 100+ recommendations in leading ISV docs (Google, Microsoft, GitHub, Amazon); 600k+ organic references - de-facto standard designation.

Competitors not named in deck. Moat is product-led + ecosystem embedding, not paid acquisition.

## Team & funding ask / use of funds

- **Alan Shreve** - Founder & CEO. Early engineer and first SMS product developer at Twilio; developer product, developer marketing, and distributed systems background.
- **Ben Sabrin** - CRO. Led dev-led revenue at JBoss ($0→$60M in 4 years) and MongoDB ($0→$40M in 2 years); led Privileged Access at Okta (largest single contract).
- **Peter Shafton** - CTO. VP Architecture and Interim CTO at Twilio; 30+ years at Twilio, SGI, Yahoo, Cisco.
- Extended team backgrounds: Twilio, Okta, InfluxData, Instabase, Google, AWS, DigitalOcean, Netscape.
- **Raise**: $50M. Use of funds: Not in deck.

## Recommended financial model

- **Archetype + why**: SaaS ARR model with PLG funnel mechanics. Revenue is subscription-based; growth is purely organic / product-led with $0 CAC. The model must capture the free-to-paid conversion funnel across a large free user base, rather than a traditional sales-driven pipeline. Secondary layer: usage-based expansion revenue is likely (tunnels, bandwidth, seats) but not confirmed in deck.

- **Forecast horizon & granularity**: 5-year forecast (Year 1–5), monthly granularity for Year 1–2, annual for Year 3–5. Monthly needed to model the daily sign-up funnel and conversion lag.

- **Key drivers & assumptions**:
  - Daily new account sign-ups: 4,000/day; modest growth rate of 15% YoY as product matures
  - Total free accounts at model start: 5.4M
  - Paid customers at model start: 30,000
  - Free-to-paid conversion rate: ~0.56% of cumulative accounts (implied by 30K/5.4M); may be higher on cohort basis
  - Monthly paid churn rate: 1.0–1.5% (developer infra SaaS benchmark; no deck data)
  - ARPU / ACV: unknown - ARR redacted; back-of-envelope: if ARR is ~$20–30M, ARPU = $667–$1,000/year per paid customer; model should parameterize this
  - Gross margin: 75–85% (developer infrastructure SaaS benchmark; bandwidth/infra costs are the variable component)
  - CAC: $0 (fully PLG) - S&M spend post-raise will need to be assumed for enterprise motion
  - Headcount growth: - not in deck; model post-raise hiring plan from $50M raise
  - R&D / G&A as % of revenue: typical early-growth SaaS benchmarks (~30% R&D, ~10–15% G&A)

- **Scenarios (Base / Bull / Bear - which variables flex)**:
  - **Base**: daily sign-ups grow 15% YoY; conversion holds at ~0.6%; ARPU expands modestly with enterprise motion
  - **Bull**: enterprise sales motion unlocked post-raise accelerates conversion to 1.5%+ and ARPU to $2K+/year; ISV embedding drives step-change in paid accounts
  - **Bear**: sign-up growth slows to 5% YoY; churn rises to 2.5%/month; enterprise motion takes 18+ months to ramp; raise not fully deployed efficiently

- **Required sheets / outputs**:
  1. Assumptions dashboard (all inputs surfaced and color-coded)
  2. Funnel model: free accounts → paid conversion → revenue build
  3. P&L (Income Statement): ARR, revenue, gross profit, operating expenses (S&M, R&D, G&A), EBITDA
  4. Headcount plan (post-raise hire ramp)
  5. Cash flow and runway (critical: first external raise, $50M deploy timeline)
  6. Scenario toggle (Base / Bull / Bear)
  7. KPI summary: ARR, paid customers, ARPU, conversion rate, gross margin %, burn multiple

## Frequently asked questions

### Is the Ngrok financial model free?

Yes. The Ngrok model is a free Excel download with live formulas.

### Can I change the assumptions?

Yes. The workbook is editable and its live formulas recalculate when assumptions change.