Casual worker management platform Deputy is back from the brink to become a shy unicorn

- March 19, 2024 3 MIN READ
Ashik Ahmed and Steve Shelley
Deputy cofounders Ashik Ahmed and Steve Shelley
Casual workforce management platform Deputy is claiming unicorn status  – a $1 billion-plus valuation – more than 15 years after it was founded, following a A$37 million buy in from a US strategic partner.

But the Sydney-based scaleup is reluctant to talk about it, along with its investors.

Deputy’s PR firm sent out a media release on Tuesday about a “strategic partnership” with the privately owned Express Employment Professionals (EEP), which made no reference to the sizeable capital outlay from the 41-year-old US staffing business.

News of the investment and surprise near trebling of the company’s valuation – 5.5 years ago it was worth $423 million following a $111 million Series B in November 2018 – were revealed in an AFR story a few hours before the release was sent to other media.

When Startup Daily contacted Oklahoma City-based EEP about its investment, we were referred to Deputy, which referred us to their PR, who confirmed the investment and valuation were correct, based on “recent ASIC records”.

Deputy’s last financial filings were in June 2023.

Asked for comment, the PR subsequently issued a statement on behalf of a Deputy spokesperson.

“The strategic investment is not something that we are focused on publicly, however, what I do want to point out is that there is no greater validation than being backed by a customer or partner,” it said in part.

Well, that depends on whether you consider workplace social media site LinkedIn public or not.

On there, the company posted a link to the AFR story saying it “covered how our valuation has more than doubled since 2018 to >$1.1B”.

Strategic investors are sometimes seen as preferable to VC funding by founders because they can be willing to pay a higher price for a smaller stake in a startup.

Deputy’s remarkable rise at a time when most mid-life startup valuations have either flatlined or fallen in value – Canva has been worth A$39bn (US$26bn) for more than 18 months, despite strong customer and revenue growth subsequently, amid secondary market share sales – has been foretold for some months.

Back in November, the AFR declared Deputy “in unicorn territory” using “an enterprise value-to-revenue ratio of 10.5 times”, saying it was the “average” for listed enterprise software-as-a-service companies such as Atlassian, Salesforce, Workday and ServiceNow.

Nasdaq-listed Atlassian’s market capitalisation has halved since October 2021 and now sits just above US$50 billion – the same level it was at in late 2020.

And unlike Atlassian, Deputy is now profitable, having delivered an $8.5 million statutory profit in FY23, a turnaround from a $24.9 million loss 12 months earlier.

Impressively, revenue trebled in just three years to pass $100 million in annual recurring revenue (ARR) by 2023.

In 2019 Deputy had income of $34 million from more than 200,000 workplaces, so it’s certainly extracting a lot more value from its customers. Back when Covid hit, the company said the pandemic halved its then 2 million-strong user base.

When lockdowns began and businesses shut, Deputy laid of 30% of its 300-strong workforce and began a fight for its very survival. Its post-pandemic turnaround appears remarkable on several fronts.

Deputy was founded by Steve Shelley and Ashik Ahmed in 2008, for businesses employing hourly or shift-based workforces to deal with issues such as time management, scheduling, time sheets, and communication.

The startup took on its first external funding in January 2017, with Boston VC OpenView, leading a A$33 million Series A. Local VCs Square Peg and EVP jumped about 22 months later for the Series B.

In February 2023, Ahmed stepped down as CEO after six years, handing the helm to US-based Silvija Martincevic.

At the time he said Deputy had $100m in ARR by late 2022. The platform was used by in 330,000 workplaces by 1.3 million shift workers daily in more than 100 countries when Martincevic took charge, so user number growth has been under 10% over the past year.

The partnership with Express Employment Professionals has the potential to restore user numbers to pre-pandemic levels. EEP is a franchised staffing business with more than 860 locations in the US, Canada, South Africa, Australia and New Zealand, employing 492,000 people globally. They’ll get access to Deputy, representing around a 36% uplift in users if they all convert to paying customers.

We asked local investor EVP to comment on Deputy’s success, but founder Howard Leibman declined saying the VC was “happy not making public comment”.

That was a few hours after Leibman said on Linkedin that: “I’ve had the privilege of working with Deputy since we were a team of 20, and of serving on the Deputy Board since 2016. Whilst it’s taken some time to exceed the $1 billion valuation, the fact that Deputy would one day be a unicorn was for me never in doubt.”

So two years after Linktree was the last Australian startup to claim unicorn status when it banked $152 million at a $1.8 billion valuation, Deputy joins those exalted ranks as a new kind of single-horned mythical beast – a modest one.

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