Pax8 Hits $1 Billion Annual Recurring Revenue Run Rate; Preps Partner Conference

Pax8, the cloud marketplace provider to MSPs and channel partners, has hit a $1 billion ARR (annual recurring revenue) run rate and expects to be EBITDA positive in early 2023, a company spokesperson confirmed to ChannelE2E.

The ARR milestone arrives seven months after Pax8 raised $185 million at a $1.7 billion valuation. Next up, the company is preparing the Pax8 Beyond 2023 global partner conference -- an inaugural event set for June in Denver, Colorado.

Pax8's Business Evolution, Annual Recurring Revenue Growth

Pax8 -- founded in 2012 by CEO John Street, Chief Strategy Officer Klaus Dimmler & COO Ryan Walsh -- originally positioned itself as a cloud distributor for MSPs. The company gradually expanded beyond the 'distributor' moniker (which sometimes faces valuation limitations on Wall Street), and now defines itself as "the world’s favorite cloud marketplace for IT professionals to buy, sell, and manage best-in-class technology solutions."

Among the business metrics to note: Pax8 now has more than 1,500 employees, and 25,000 partners that support more than 400,000 customers, a company spokesperson tells ChannelE2E.

Moreover, it sounds like revenues are growing rapidly -- though it's important to put Pax8's ARR (annual recurring revenue) figure in proper context. Indeed, the $1 billion ARR run rate essentially means Pax8 recently generated roughly $83 million in Monthly Recurring Revenue (MRR), and that figure annualized ($83 million X 12) represents the $1 billion ARR run rate figure.

Pax8 Competition and Acquisitions

In many ways, Pax8 competes against traditional IT distributors such as D&H Distributing, Ingram Micro and TD Synnex, along with cloud-centric marketplace providers such as Sherweb. In some ways, Pax8 also competes against ConnectWise Marketplace, though the two companies also partner.

Pax8 has been growing both organically and through M&A. Key acquisitions and business moves include:

Pax8 Funding, Valuation and Next Moves

Pax8 achieved a $1.7 billion valuation when it raised $185 million in April 2022. Key Pax8 investors in that round included Softbank, Catalyst Investors, Sageview Capital, Blue Cloud Ventures, and Liberty Global Ventures. Also, Pax8 hired IPO (initial public offering) veteran Puneet Pamnani to succeed Michael Lipfield as CFO in April 2022.

We don’t know if Pax8’s valuation has been adjusted amid the recent SaaS market correction on Wall Street, nor do we know if Pax8 is planning an IPO once the turbulence on Wall Street settles down.

Still, this much is known: Pax8 CEO John Street and the executive team are long-term planners with healthy motivational chips on their shoulders, ChannelE2E believes.

The background: Poke around the Pax8 executive team, and you'll find that some of those entrepreneurs previously built MX Logic and sold that business to McAfee in 2009, as reported by The VAR Guy (a class act, for those who remember him...). Alas, McAfee mismanaged the MX Logic business. The McAfee missteps left quite an impression on the former MX Logic team, ChannelE2E believes. When those team members regrouped to form Pax8, they took a long-term view of their business journey and avoided early exit offers, ChannelE2E suspects. (Hmmm... that entire paragraph feels like The VAR Guy was at the keyboard...)

Encore? So what's the next move for Pax8? Keep a close eye on that June 2023 partner conference. Off-and-on rumors -- swirling for nearly a year -- suggest a major channel veteran could step onto the stage at that Pax8 Beyond 2023 event... though we certainly don't know for sure.

In the meantime, keep an eye on Pax8's continued expansion across Europe and Asia Pacific. And when U.S. financial markets and technology valuations stabilize, watch for Pax8 to potentially make that run at that long-term IPO goal...