RI

Rippling (Series F) Financial Model

• Single "Employee Graph" - a central source of truth for all workforce data that propagates changes automatically to every connected business system.
• Three product clouds built on top: HR Cloud (payroll, recruiting, benefits, performance), IT Cloud (app management, devices, inventory, security), Finance Cloud (global payroll, bill pay, expenses, corporate card).
• "Rippling Unity" middleware layer: analytics, workflow automation, policies, permissions - shared across all applications.
• Value proof: Independent research (BSG) found Rippling customers carry ~half the HR/IT/Finance headcount vs. non-Rippling peers at every company size band.
• Compound-software strategy: win each vertical by matching point-SaaS feature parity, then out-compete on integration, platform capabilities, and bundled pricing.

• Subscription ARR - per-employee-per-month model implied by HCM industry context; actual PEPM pricing not stated in deck.
• Multi-product / multi-SKU expansion within existing customers (cross-sell) is a core growth engine; bundled pricing positions Rippling advantageously vs. point-SaaS on total cost.
• New logo sales (NLS) and cross-sell (XSell) tracked separately in Salesforce pipeline.
• Implementation/onboarding (IM) and Professional Services (Pro Svcs) revenue exist but treated as cost in CAC payback calculation.
• Global EOR (Employer of Record) is a services revenue line in addition to software.
• ARR figure redacted in slide 12: "Instead of thinking of Rippling as a single business at $ of ARR…".

• Headcount efficiency (slide 4):
• Company size 501–1,000: Rippling customers avg 24.2 HR/IT/Finance staff vs. 44.9 non-Rippling (+20.7 savings)
• Company size 251–500: 16.9 vs. 29.0 (+12.1)
• Company size 151–250: 8.2 vs. 17.0 (+8.8)
• Company size 26–150: 3.0 vs. 7.6 (+4.6)
• Company size 2–25: 0.4 vs. 1.1 (+0.7)
• Source: BSG study (June 2022); 391 interviews + 8,000+ Rippling customers / 300,000 employees
• Win rates vs. incumbent solutions (NLS Stage 3 / XSell Stage 4) (slide 10):
• Spend Management: 56%, 38%, 57%, 49%, 50% (vs. 5 unnamed competitors)
• Global Payroll & EOR: 51%, 56%, 70%, 60% (vs. 4 unnamed competitors)
• ATS: 31%, 42%, 46%, 42%, 37% (vs. 5 unnamed competitors)
• Performance Management: 42%, 39%, 58%, 53%, 33% (vs. 5 unnamed competitors)
• Products launched within last 18 months as of March 2024
• CAC payback (FY23, Feb 2023–Jan 2024) (slide 14):
• Overall blended: 17 months
• Cross-sell: 10 months
• Marginal cross-sell (excluding shared marketing overhead): 8 months
• R&D spend 2024 plan (slide 12):
• Cash R&D: 46% of revenue
• Including SBC (at 409a value): 67–82% of revenue
• Public peer benchmarks (cited in slide 13):
• Average public SaaS CAC payback: 28 months; average operating margin: 10% (as of March 2024)
• Paycom R&D: 10% of revenue; Paylocity: 11%; Paycor: 9%; Ceridian: 13%; UKG: 17% (2018)
• ARR absolute level: Redacted.
• Customer count, revenue growth rate, NRR/NPS, churn: Not in deck.

• CAC payback: 17 months overall, 10 months cross-sell, 8 months marginal cross-sell.
• Cross-sell CAC payback is the key economic lever - compound-software model generates a "parade of products" from each logo.
• Gross margin: percentage not explicitly stated. Pro Svcs and IM costs are excluded from standard GP calculation and loaded into CAC instead.

Competitors by product line:

• Payroll/HRIS: Gusto, ADP, Intuit, Trinet, Insperity, Paylocity, Paycom, UKG, Workday, Employment Hero (AU), Sage (UK)
• Device management: JAMF, JumpCloud
• Spend/expenses/card: Brex, Ramp, Expensify, Navan, Concur
• ATS: Greenhouse, Lever, Jazz
• Global EOR: Deel, Remote, Papaya, Velocity Global
• Long-term / strategic: Salesforce, Microsoft, Oracle, ServiceNow

Moat:

1. Employee Graph as a proprietary data primitive - not replicable by point-SaaS vendors.
2. Platform middleware (Rippling Unity) built for 30 products simultaneously - 100x deeper investment than any single-product competitor can justify.
3. Bundled pricing advantage as product count grows - each incremental SKU lowers effective CAC.
4. Common UX / RQL (Rippling Query Language) - customer switching costs rise with product depth.
5. "Second-mover advantage" - enters mature, commoditized markets where the spec is known, then wins on platform differentiation.

• Founder/CEO: Parker Conrad (implied - investor memo style, first-person narrative).
• Legal entity: People Center, Inc. d/b/a Rippling.
• Funding ask / round size: Not in deck - memo is an investor information document for a Series F; terms undisclosed.
• Use of funds: Implied - continued R&D investment across 12+ product lines; scaling global go-to-market. No explicit use-of-funds breakdown.

• Archetype + why: Multi-product SaaS ARR model with cohort-based expansion. Rippling's economics are driven by (a) new logo ARR with high upfront CAC and (b) sequential cross-sell modules to existing customers with near-zero marginal CAC. A standard single-product SaaS ARR model under-represents the compounding nature of the business. The right frame is a cohort model where each customer vintage accumulates products (and ARR) over time, with cross-sell as the primary NRR driver.

• Forecast horizon & granularity: Monthly for Year 1–2 (tracks product-attach and cross-sell timing); annual for Years 3–5. Five-year horizon is appropriate given early-stage multi-product buildout.

• Key drivers & assumptions:
• Starting ARR: - redacted in deck; use $1B+ placeholder based on Series F stage timing (March 2024 public context suggests ~$350M+ ARR; use $400M as working assumption)
• New logo growth rate: 30–40% YoY new logo ARR, decelerating to 20% by Year 5
• Average initial ACV (new logo): $8,000–$15,000/year PEPM-derived, skewed to 26–500 employee segment (ICP implied by win-rate table)
• Product attach rate at close: 2–3 modules avg at initial sale
• Cross-sell velocity: 1 additional module per customer per 12–18 months; grounded in 10-month cross-sell CAC payback
• NRR (Net Revenue Retention): 120–130%, consistent with compound-software expansion economics; not stated in deck
• Logo churn: 5–8% annually; not stated in deck
• Gross margin (software): 65–70% blended (HCM SaaS benchmark); EOR/services line drags blended margin
• R&D as % of revenue: 46% cash in 2024; declining to 25–30% by Year 5 as platform matures
• S&M as % of revenue: 30–35% currently (implied by 17-month CAC payback and ~65% GM); declining to 20% as cross-sell share rises
• G&A as % of revenue: 10–12%, declining to 7% at scale
• CAC payback - new logo: 17 months
• CAC payback - cross-sell: 10 months (8 months marginal)
• International % of revenue: 10–15% today, growing to 25% by Year 5
• EOR headcount attached to GP&EOR product: separate variable cost line (EOR is pass-through labor + margin)

• Scenarios (Base / Bull / Bear - which variables flex):
• Base: 30% new logo ARR growth, 1 module/customer/15 months cross-sell, NRR 122%, R&D declining per plan
• Bull: 40% new logo growth, faster product attach (1 module/10 months), NRR 130%, GM expansion from platform leverage
• Bear: 20% new logo growth (macro slowdown, competitive pressure from Workday/UKG), NRR 110%, R&D stays elevated at 50%+ due to international build-out, gross margin compression from EOR mix

• Required sheets / outputs:

1. Assumptions - all drivers, scenario toggles
2. New Logo Waterfall - cohort entry, initial ACV, product modules at close
3. Customer Cohort Expansion - module attach schedule, ARR per cohort by year
4. ARR Bridge - new logo, cross-sell, upsell, churn, FX
5. P&L - Revenue (software vs. services/EOR), COGS, Gross Profit, R&D, S&M, G&A, EBITDA/Op Income
6. CAC Payback - new logo vs. cross-sell, blended, with sensitivity to GM
7. Headcount Plan - R&D / S&M / G&A headcount driving cost, linked to revenue scale
8. Cash & Runway - burn, implied fundraising need (especially relevant given deep R&D investment)
9. Dashboard - ARR, NRR, CAC payback, R&D%, GM%, Op Margin% KPIs