February 14, 2018

How Revulytics Turns Software Usage Analytics Into Revenue for its Customers

The BSA’s latest study estimated the commercial value of unlicensed software to be $52.2B. For software companies, that’s a significant amount of lost revenue. But does that revenue have to be “lost”?

Revulytics doesn’t think so. “This represents a significant opportunity for software vendors to convert unlicensed users into paying customers,” said President and CEO Joe Noonan.

revulytics joe noonan
President and CEO Joe Noonan.

Most users, the software intelligence company says, are in fact victims, who buy pirated software copies from websites either in pursuit of a deal or without realizing what they were doing. And these users, when informed, will gladly rectify the situation and buy a legitimate copy of a company’s software.

Revulytics does not just argue that these users exist—a large part of their business model revolves around them. Revulytics’ core SaaS product, Compliance Intelligence, helps companies solve this problem and allows them to recoup billions of dollars of lost revenue.

Compliance Intelligence is embedded into a company’s software, which allows Revulytics’ customers to detect and report on pirated or unlicensed use. Revulytics gathers this data into a dashboard that provides customers with actionable insights and leads so they can decide how to take action on converting those non-paying uses.

In one use case, Revulytics can send a user in-app messages, alerting them that their copy may not be genuine. It could then offer the option to learn more and/or purchase a license. If the user chooses not to take action, Revulytics’ technology can limit the unlicensed application’s functionality.

The Waltham-based company was founded by President & CEO Joe Noonan in 2006 as V.i. Labs, along with Dr. David Pensak (who developed the original technology) and VP of Products & Strategy Victor DeMarines. Their first product wrapped software applications with advanced encryption technology to prevent piracy, code theft and tampering.

“The use case that really got us and our investors interested in the technology was the threat of hacking software to remove its licensing DRM, which really enabled piracy all over the world,” Noonan said. “Companies all around the world were downloading software illegally, not paying at all, or paying ten cents on the dollar, and software companies were just losing huge amounts of money on an annual basis.”

They found success selling to early adopters who used the tech to protect their software, but due to industry myths about the true nature of piracy, Noonan said that Revulytics faced challenges early on.

“A lot of the attitude back ten years ago was that the only people who stole software were students. Companies were hesitant to put in protection, thinking that students would adopt their pirated software and eventually end up at a legitimate company who would become a paying customer.”

Revulytics came up with the idea to dispel this myth, which led the company down a brand-new direction in 2009: to turn unlicensed users into leads.

“We got the idea that we could build technology to track and report on illegal software use all over the world, and then provide it back to the software publishers on a subscription basis so they could see where their software piracy was happening by geography, and then gather information about the companies all over the world that were using this software without a license. Our technology works very similarly to the way LoJack works in a stolen vehicle.”

The pivot led to the Compliance Intelligence solution seen above (originally named CodeArmor Intelligence), and since then, Noonan claims that Compliance Intelligence has supported compliance programs that have generated “well over $2 billion of new licensed revenue for our software manufacturers.”

Their business model is a “shared success” one. Revulytics licenses their technology to customers under an annual subscription. Then, when a company successfully takes action (obtaining new customers and recouping licensing fees), Revulytics shares in a success fee with them.

Seeing the value customers were getting from software usage analytics for compliance, the company further expanded its offerings by acquiring Trackerbird Software Analytics in March 2016, whose technology tracks software usage. In addition to its software compliance solutions, Revulytics now supports product management, development and marketing teams by tracking information including what platform a user is using software on, what features are being used, and what they’re doing with the software once it’s downloaded. And in late 2016, when V.i. Labs changed its name to Revulytics, the Trackerbird technology became Revulytics Usage Intelligence.

Revulytics’ pivot and expansion have proven successful all around, as the company doubled its employee base in 2016 to over 50, and they’re growing at a 30% clip YoY. Moreover, their analytics business doubled in its first year on the market, and Noonan expects the same to happen in 2018. Industry analyst Gartner seems to agree, naming Revulytics a “Cool Vendor” in 2017 and citing software usage analytics as “on the rise” in two of its 2017 Hype Cycles (for Software as a Service and Customer Experience Analytics).

It’s clear that by this point, while Revulytics continues to be dedicated to protecting software vendors’ investments in their applications, they’ve grown far past its humble beginnings as a piracy prevention company.

“Our business is all about providing usable information that people will want to see, take action on, and must have in order to make data-driven decisions on a regular basis in their company,” Noonan explained. “That’s why our business is growing. it’s information that either makes them money or saves them money.”

Alexander Culafi is a Staff Writer for VentureFizz. You can follow him on Twitter @culafia