VC-backed Applitools comes to market

Although likely too small to make a new PE platform, Applitools is expected to generate interest among PE firms seeking add-ons to DevOps and software portfolio companies, sources said.

VC-backed software testing provider Applitools is up for sale, sources familiar with the process told PE Hub.

William Blair is advising the company on a sale process that began about two weeks ago, the sources said.

Although Applitools is likely to be too small to make a new PE platform, the company is expected to generate interest among PE firms seeking add-ons to DevOps and software portfolio businesses, the sources said. Such companies could include the likes of Francisco Partners-backed DevOps provider SmartBear or Vista Equity-backed crowd-testing and digital quality provider Applause, one of the sources said.

Applitools, based in San Mateo, California, and Ramat-Gan, Israel, is a software provider offering AI-powered automated visual testing and monitoring for mobile, web and native apps. The company enables test automation, DevOps and development teams to release software automatically through its SaaS Visual Testing and Monitoring product.

Applitools generated around $25 million in revenue last year and is projected to produce $30 million in 2021 with $25 million being annually recurring, the sources said. They added that company expects to reach break-even point this year.

In a potential sale, the company could be valued at 8x to 10x ARR, suggesting a deal could be valued between $200 million to $250 million, the sources said.

Applitools’ customers include American Express, Intuit, Bose, Sony, Salesforce, Slack, ServiceNow, Twilio, Wix and Siemens.

In April 2018, the company raised $31 million in a Series C round of funding led by OpenView, with participation from existing investors Sierra Ventures, Magma Venture Partners, iAngels and La Maison.

In July 2017, Applitools raised $8 million in a Series B round of funding led by Sierra Ventures, with participation from Bessemer Venture partners and existing investors Magma Venture Partners, iAngels and La Maison.

Applitools, William Blair, OpenView, Sierra Ventures, Magma Venture Partners and other investors did not return PE Hub‘s request for comment.