Since their revenue models are pretty similar (lead gen for financial products), would it be reasonable to use Mint's per-user revenue (which had previously circulated back closer to their acquisition to be somewhere in the neighborhood of $20-$30 per user per year, I believe) to estimate Credit Karma's revenue? Putting their revenue at somewhere near 800m per year?
The revenue model is similar, but the product is obviously really different.
If anything, Credit Karma ARPU could be higher. Credit card referrals typically range from $50 to $200 dollars. Massive amounts of users come to Credit Karma through Google, sign up for a credit score/card, and then never come back.
This valuation would imply they refer at a rate of ~1-5 million cards a year I guess.
Profitably has never been the most pressing concern for these growth companies. Amazon went 20 years before turning a consistent profit, so it's not like there is a well-defined upper-limit where profitability is mandatory. Amazon made a trade-off choosing revenue over profitability, and that's what investors want.
Investors care less about actual profits than the ability to prove profits can be generated. Once it's demonstrated/proven that profits can be attained, investors become extremely patient. As long as potential profits keep rising, the enterprise value will rise, and investors will be happy. This is not the Warren Buffett approach, obviously, but that doesn't make it necessarily wrong or invalid. It's consistent within the theory of rational expectations.
I would hope their ARPU is higher...otherwise they'll never be profitable. Mint loses a ton of money. There are reasons why it makes sense for Intuit to fund that, but if CK can't be profitable, finding that kind of acquirer that will continue to operate them at a loss will be hard, especially with that massive valuation.
CK is much more than just lead referral program as Mint is. CK gets access to your FICO and credit report when you check your credit score at CK. These "qualified" leads are sold to financial services companies for several hundred dollars per lead. There is a huge demand for their leads because of the quality and amount of information you get with the lead.
They'd have a $15-$20 billion valuation today if their revenue were that high in the private stage.
LendingClub is growing incredibly fast, is tracking toward $350 million - $400 million in annual revenue, and is valued at $6 billion. The public market is harsher on valuations than the private market as well. Were LendingClub still private, its valuation would probably be twice what its public valuation is.
Credit Karma is more likely in the $50m to $75m range on revenue.
