One of the most frequent questions we get from employee candidates in the past few months is how Verkada is weathering the economic headwinds prominent in the news today. More specifically, candidates want to know why Verkada’s growth team is hiring rapidly while many other companies have chosen to eliminate positions. Verkada is not immune to economic headwinds, however, the company has a strong and resilient foundation that has enabled us to persist and grow through difficult economic times.
Verkada is relatively small in a massive physical security market, which leaves us a lot of room to grow
The physical security industry is a massive well-defined market with an annual spend of around $100 billion, excluding China. Verkada’s ever-growing portfolio of product lines now addresses about $50B of this market. Despite our rapid revenue growth over the past five years, Verkada makes up a small share of the overall market size (e.g. we estimate that in 2022 Verkada had 3-5% market share of the video security industry in North America).
Verkada’s growth rate is not dependent on the physical security market expanding but rather growing into the existing market as we take more market share from incumbents. Even in the most pessimistic scenario, if we assume a contraction in the physical security market, the resulting market size would be more than sufficient for us to continue to grow for years to come.
Verkada has a broad range of product lines
What makes Verkada unique in our industry – and loved by our customers – is our value proposition of providing one platform which allows managing physical security at scale with a single pane of glass. While many of Verkada’s product lines are early in their life cycles, we are constantly building adjacent cloud-managed products to expand the power of our platform. In fact, we launched our 7th product line, Verkada Intercom, last month!
Verkada offers customers the ability to solve multiple problems (at times beyond security) by using a combination of our products working seamlessly together. This integrated, multi-product offering is an additional pillar of our resiliency. Our 15,700+ customers usually start by purchasing one or two product lines, and then quickly expand to purchase another one, and so on. The value of purchasing every new Verkada product increases with the customer’s existing Verkada deployment.
Customers continue to buy physical security products during a downturn
For many organizations, physical security solutions fall under the “need to have” and not the “nice to have” bucket. For example, a bank branch always needs to have operational cameras for security and compliance purposes and will replace them shortly after they fail. When new organizations open facilities they often need to retrofit their door access control solutions. Businesses that close at night, such as restaurants and stores, must have operational alarm systems. Verkada addresses all of these needs.
Further, Verkada has a diversified customer base across many industries. Most commercial buildings in the world are potential customers. This diversity helped Verkada weather the storm during the COVID downturn when certain industries, like healthcare and construction, were growing faster than average while other industries faced strong headwinds, such as travel and retail.
Verkada is growing responsibly - with a close eye on cash-flow management
One of the big challenges many startups are now facing are more conservative capital markets and less access to inexpensive fundraising. As the New York Times recently reported “Extreme valuations made it easy to issue stock or take on loans to expand aggressively or to offer sweet deals to potential customers that quickly boosted market share.” But with money no longer virtually free, growth is harder to buy.
Unable to raise more funding at valuations anywhere close to last year and wanting to avoid a down round, many startups resort to cost-cutting measures such as cutting expenses and layoffs to buy time until their revenue grows considerably or market conditions change. Part of these cost-cutting measures could result in additional headwinds to startups whose customer base is overweight startups.
Since inception, we’ve built Verkada with the idea of growing fast but pushing the business to be more efficient each year. Over the past few years, we’ve consistently reduced our burn relative to our scale. In 2021, we moderated our growth rate to ensure a clear path toward being cash flow breakeven in 2023. We’ve always aspired to build an independent, responsible and profitable business that can eventually thrive independently of outside capital.
We’re hiring the world’s best talent
These are the moments when many of the best companies in the world position themselves to be future market leaders. And it starts with hiring the best talent. Want to join Verkada’s marketing team? See open positions.