HR unicorn Deel prepares for IPO as soon as 2026 after revenue jump
Human resources software startup Deel has hit an annual revenue run rate of $800 million, the company told CNBC.
Deel also added two major new shareholders to its
capitalization table, General Catalyst and Abu Dhabi sovereign wealth fund
Mubadala, as part of a $300 million secondary share sale.
“We are getting ready to go out, potentially next year or a
bit later,” Deel CEO Alex Bouaziz told CNBC, discussing the firm’s IPO plans.
Human resources software firm Deel said it has hit an annual
revenue run rate of $800 million and is ramping up preparations to go public
with a view to IPO as early as next year.
The startup, which aims to simplify the process of hiring,
paying and managing employees remotely, told CNBC that it hit the milestone
after a 70% year-over-year bump in revenue in December. A revenue run rate is
an estimation of a company’s future annual revenue, extrapolated from a monthly
data point.
Deel has also added to its capitalization table with two new
major shareholders following a $300 million secondary share sale conducted last
year.
The company said that General Catalyst and an unnamed
sovereign wealth fund — which CNBC understands is Mubadala Investment Company,
the sovereign wealth fund of Abu Dhabi — joined the round as new investors.
It comes after Deel in 2022 hit a $12 billion valuation.
Following the secondary share transaction, the company’s valuation was boosted
to $12.6 billion, according to two sources familiar with the matter, who did
not want to be named due to the sensitivity of the matter.
In an interview with CNBC, Deel CEO and co-founder Alex
Bouaziz said the company is continually developing robust financial audits,
compliance processes and infrastructure as it looks to ensure it’s in a good
position to IPO.
“We are getting ready to go out, potentially next year or a
bit later,” Bouaziz told CNBC, adding that the firm recently added two new
board members including former Illumina CEO Francis deSouza and former Coupa
Chief Financial Officer Todd Ford. “We believe we have the right reasons to go
public.”
Bouaziz said that a public listing could help the firm
further along on its mission to build a recognizable brand in HR and payroll
software.
“When it comes to HR and payroll, I’ve never truly felt like
someone captured the essence of a great brand,” he said. “No one really
[builds] a brand that you feel resonates with people.”
“This is really what we want to build. This is, I think, a
big part of the experience that we can bring to people. Being a public company
can reinforce that sentiment, be part of the story and be part of the
business,” Bouaziz added.
The CEO said that Deel is under no pressure from its
financial backers to go public despite its large size. The firm currently has
about 5,000 employees globally.
Founded in 2019, Deel is a platform that helps businesses
with HR services such as onboarding, compliance, performance management,
payroll and immigration support. It became popular during Covid-19 shutdowns in
2020 and 2021, which drove the trend of hiring staff remotely.
Jeannette zu Fürstenberg, managing director of General
Catalyst, said Deel’s “focus on enabling large enterprises to navigate the
complexities of a global workforce fits seamlessly with our mission to back
bold ideas that create enduring value.”
Zu Fürstenberg previously backed Deel in a seed investment
when she was with European venture capital fund La Famiglia, which merged with
General Catalyst in October 2023.
Motion to dismiss ‘baseless’ lawsuit
Against the backdrop of financial milestones and progress
toward an IPO, Deel is currently facing litigation over claims that it
facilitated money laundering transactions.
Last month, Deel was served a lawsuit in a Florida court
which alleges it processed payments without proper licensing and enabled money
laundering in relation to illegal payment transactions worth at least $2.27
million made on behalf of a former client, Surge Capital Ventures. It also
accuses Deel of facilitating payments to Russia in violation of U.S. sanctions.
Deel strongly denies the claims and has fired back with a
motion to dismiss the lawsuit, describing it as “riddled with baseless
allegations, gross inaccuracies, conjecture, and downright falsehoods.”
Deel also alleged the suit was part of a “coordinated effort
by a major investor in Deel’s primary competitor seeking to tarnish Deel’s
stellar reputation.”
The plaintiff’s lawyer, Thomas Grady, is named
as the incorporator of Waveling Insurance Services in a Florida
Department of State filing. Waveling Insurance Services is now known as Ripple
Insurance Services, which is a subsidiary of HR and payroll software firm
Rippling. Grady is reportedly
an investor in Rippling, according to Florida newspaper Naples Daily News,
although CNBC was unable to confirm this.
Neither Thomas Grady nor Rippling were immediately available
for comment when contacted by CNBC.
Bouaziz told CNBC he feels “pretty confident” about Deel’s
chances of dismissing the lawsuit.
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