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SaaS major Whatfix has raised $125 million in a Series E funding round led by Warburg Pincus, with participation from existing investor SoftBank Vision Fund 2. 

The company will use the newly acquired funds to strengthen its leadership in the Digital Adoption Platforms (DAP) category and enhance its product offerings through organic growth and strategic acquisitions. 

“The primary intention is to use this money to accelerate organic growth and acquisitions. Second, double down on some of the existing geographies and the new geographies we want to open up. We are already doing good business in the US and Europe and want to accelerate that, along with adding new geographies like the Middle East and Southeast Asia,” Khadim Batti, CEO and Co-founder of Whatfix, told YourStory.

The company also plans to increase its market presence in the APAC region to expand its footprint globally.

“The third reason is doubling down on our existing expansion of the category, adjacencies, and AI,” he added. 

The Bengaluru-based firm is raising the new round at a substantial premium. “The most important part is that the DAP category has been validated. We want to double down by expanding this category further so that the market size goes up and there’s a huge upside going forward from here,” Batti said. 

The company has achieved a 4.5X increase in annual recurring revenue (ARR) since its last funding round, with new products contributing 15% to overall revenue. Its latest offering, Enterprise Insights, provides analytics on the software stack to enhance decision-making.

Additionally, it has launched a beta version of its simulation product, Mirror, and has enhanced several generative AI features across its existing product lineup.

“As a partner of choice for top global enterprises across industries, we believe Whatfix has immense potential to capitalise on the tailwinds and solidify its position in the high-growth DAP market,” said Narendra Ostawal, Head of India Private Equity, Warburg Pincus.

On revenue growth

According to Gartner’s 2023 Market Guide, 70% of organisations are expected to use DAPs by 2025. 

“Since our initial investment in 2021, we are pleased to see Whatfix’s strong growth and sustained innovation,” said Narendra Rathi, Investment Director, SoftBank Investment Advisers.  

Whatfix was last valued at $568 million in 2021 after raising $90 million in its Series D funding round led by SoftBank Vision Fund, along with participating investors such as Eight Roads Ventures, Sequoia Capital India, Dragoneer Investment Group, F-Prime Capital, and Cisco Investments.

“We have got a significant premium; you can say 50% more than last round.. just maybe almost there. We were heads on executing and building our customer base, product portfolio, and our innovation. And that has made us actually become a category leader,” Batti said.

Batti further emphasised that the company has achieved category leadership globally, with 95-96% of its revenue coming from international markets.

Whatfix has achieved 40-45% growth over the past two years. Of this, 25-30% of accruals are reinvested in sales, marketing, and R&D, while 10-15% is allocated to balance the company’s profit and loss statement (P&L) to improve EBITDA and reduce cash burn, he added.

“If we continue the same way in the next four quarters, we should be able to be cash flow regular and in another six quarters, we should be able to be EBITDA breakeven, without compromising growth. We are looking at maintaining preferably 40-45% and ensuring that when we go IPO, we are adhering or exceeding the rule of 40,” Batti said.