Where Web Hosting Companies Stand on the 2016 Inc. 5000

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Recently the 2016 Inc 5000 List of America’s fastest-growing companies was released. To be listed you need growth, but first, you have to apply.

This year ten companies made my list of WHIR-centric companies, down from last year. The drop? I decided one company was not relevant; GoDaddy went public, and three others either did not make the list or did not apply. Namecheap is the only new addition.

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I added one column that is not listed on the 5000 list: a direct comparison between 2015 and 2014 revenues. As an M&A professional I find it valuable, and the first item I added to my private spreadsheet. It also goes to demonstrate how one year can skew the three-year track that is used by Inc. magazine.

I believe The Achilles Heel for most hosting companies is the requirement that your revenues be on an accrual basis. Starting out, hosting firms use cash accounting. This disqualifies those concerns from making the list in what usually are high growth years.

SEE ALSO: Inc. 5000 – Where Hosting Ranks in 2015

About the list:

2016 Inc. 5000
Inc. Rank Company 3 yr. Growth 2015 Revenues in Millions 2014 Revenues in Millions (If Available) 1 Yr Growth       2014 vs 2015
1285 Edge Solutions 300% $ 46.9 $23.0 103.9%
1796 ColoCrossing 207% $8.9 $8.0 11.3%
2019 Wowrack.com 184% $ 5.5 $6.7 -17.9%
2944 Namecheap 117% $ 76
3128 Aldridge 108% $16.4 $15.1 8.6%
3898 Edge Hosting 76% $17.6 $15.6 12.8%
4423 Nothing But NET 58% $ 2.5 $2.3 8.7%
4894 ServerCentral 44% $ 37.8 $36.4 3.8%
4953 SingleHop 42% $ 41.2 $36.4 13.2%
4985 Liquid Web 40% $ 69.6 $65.1 6.9%

This year Inc.’s overall #1 fastest growing company in the United States is Loot Crate. Over the last three years it grew 66,789 percent and in 2015 had revenues of $116.2 million. The company sends monthly mystery boxes to over 600,000 subscribers. Theme-filled crates as described by the company as a “curated collection of awesome items from the best pop culture franchises delivered to your door every month.” Wish I had invented it.

Being on the list has benefits. Many companies use it as a sales tool. Current and prospective customers like the Inc. Magazine stamp of approval. Most recipients take advantage of local and national press releases touting their listing; their company has come of age, and of course has great growth.

Why should you be on the list? The biggest benefit can be monetary. The mother’s milk of continued growth is money, and the one thing that investors love is growth. This is a marriage made in heaven. The Inc. 5000 is a shopping list for bankers. If you are high on the list, you will be beating them off with a stick.

To be listed you need to make a formal application, fill out the forms, write a check for $150, and you are under consideration. It is all based on revenues; you don’t have to worry about pesky operating statements, balance sheets, or things like profits. The real requirement is a minimum of $2 million verified annual revenues using accrual accounting.

If over the last three years your revenue growth was near or over 40 percent you have a good chance of breaking in.

Do you want to make the 2017 edition? Other than growth you need to have generated revenue by Mar. 31, 2013, had total revenues of at least $100,000 in 2013 and finally have the minimum of $2 million in 2016.

Later, Tom

Find out more about Tom Millitzer: Millitzer Capital FB

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One Comment

  1. You missed a company that I work with Nexcess.net, who was #2468 on this year's list and has been on the Inc. 5000 for seven straight years.