Roon Financial Stability / is Roon Labs LLC a “good investment”?

Hi-

I’m halfway into my trial. There’s stuff I dont’ like, but the net result is I’m rediscovering music that I hadn’t thought about or listened to in years. If the result is supposed to be a version of being able to see all of the spines of my CDs, and leave them scattered on the floor so I can find/lose/read/listen - then it’s working wonderfully.

So, here’s my question before I sign up for lifetime: “How financially stable is Roon Labs LLC and are they going to have the resources to continue to offer and develop this great product?” I’m not exactly issuing an RFP for a piece of software - I’m one consumer. But I’d like to know… how big is the team? Is Roon cash flow positive? What kind of debt to they have? Who are the investors, and how much have they put in? How fast is revenue growing? How fast is OpEx/the team growing? Are there any big cash expenditures looming in the next 2-3 years, and how does that net against resources? Is the roadmap resourced?

Basically I’m asking “Is Roon a good investment?” Because I’m kind of putting $580 (=$700-$120) into that bet. And while it’s not going to break me if that bet doesn’t pay off, it would kinda suck. I don’t make those kind of bets at work without knowing more. I’d love any kind of information I could get that would give me comfort / confidence. @danny I recognize that Roon is under ABSOLUTELY ZERO obligation to tell me any of this. So feel free to tell me exactly what I’d say if I was running a startup, which is “do you like the product? Here’s our pricing, feel free to buy if you like, we’re very proud of it.” That is to (politely) say ‘pound sand’. But I’m hoping for something a little more…

Thanks!

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Main menu, Settings, About, The Team.

There are annual options as I am sure you have done the sums on. Some will think nothing of spending that lifetime amount on one power cable or interconnects…others think a couple of cups of coffee a month for roon is outrageous - who are we to judge.

Ive been using roon into my 5th year as a lifer now…no regrets. No body can make a guess as to the financial stability of a company in this day and age - small, medium or large all can fail or thrive.

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Just being curious myself, I suppose you have asked the executive leaders of Sonos and Schiit the same questions before putting your money in their hands; so what did they answer you?

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@Andreas_Philipp1 Well Schiit is totally different in my mind, they sell me a piece of hardware. The only exposure I have to them is the warrantee, but at the price of their gear I’m happy to accept that counterparty risk; in general I don’t think that hardware warranties are usually that useful / likely to pay off, so I accept as a rule of thumb that “if it breaks, it’s my problem, and if I get a refund replacement I’m psyched”. Schiit seems to stand behind their gear nicely so I figure I’m better off than my baseline hardware assumption.

Sonos is a much clearer comparison in my mind. They easily could have gone out of business. I know a few people who work there, and they have had financial challenges. The biggest issue is whether / when someone buys them. But I’m a believer that in the “reasonable” lifetime of hardware gear, which is… what… 6-8 years, maybe 10 if you’re lucky?.. that they’ll still be around. And I think a much more likely scenario is that someone buys them for the tech / IP / lawsuit avoidance and continues to support the install base. Admittedly that’s a conclusion, but even when they were private (they’re public now, and just had a banger quarter) they were not that tight-lipped. So I made an informed gamble. I do tell my friends when they ask if they should get Sonos that I figure that their half-life is five years, and so they should make a calculation that something better will have come along in that time frame whether or not Sonos exists and is thriving.

But you pose a fair question. I think the real difference is that Sonos makes no claim to “lifetime” (as their S1->S2 upgrade debacle showed, people had mismatched expectations). I think of it as a piece of hardware, and I’m getting updates. But I’m not buying a license in perpetuity, and I think of the hardware as having a useful lifetime just like a router. Thanks for posing the question - made me think.

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This Julia Timoshenko…?

Julia

Super helpful, thanks. I thought I’d gone through the site, but realized that once I’d started my trial I hadn’t gone back to look. Durh. Appreciate the pointer.

Here’s what I gleaned:

  • Five years old
  • 40 person team, geographically distributed
  • bootstrapped[?] “invested our own money” / “don’t spend money we haven’t earned”
  • growing but slower than they could if they threw everything they could at it
  • “prioritize lifestyle”

So let’s assume that’s all right, and trust me - those are all good things… but my big question (and this is not something I’d expect they’d let me know) is whether they get enough annual/monthly subscribers to really have recurring revenue that covers their costs. When they add a lifetime sub (and I bet a big portion of us on the forums are lifetime subs) they get all the revenue they’re ever going to get from me up front. So they get an infusion of cash, but there’s one less person they’re going to get (the pool of potential customers is smaller). Right now this might be construed as a niche product. And so the question is whether they can create a broad enough appeal product to charge people monthly on an ongoing basis that they can continue to fund supporting me. All the above stuff makes me more likely to assume the near term is fairly rosy (especially with a pandemic bump), but in a sense I wonder more about the long term. Got to build a spreadsheet model with some guesses :slight_smile:

Now that I have read this thread, I swear I will not buy anything in my life and I will keep the money in my pocket (not at the bank, because I do not have the staff list and the bank’s financial reports)… :laughing:

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Perhaps, but I suspect that lifetime subscribers are a small percentage now of the roughly100,000 subscribers. Roon labs themselves don’t see the lifetime sub being offered for ever…

I do too, and after reading the post linked below, I decided to stick with the $120/year subscription. I was not using Roon five years ago, and I’ll be (pleasantly) surprised if I’m still using it five years from now. :slight_smile:

As long as Roon Labs continues to deliver service that I value, I’m delighted to keep renewing my subscription. It feels good to not be financially locked into the platform and to support their work, much like supporting artists whose music I enjoy.

In particular, I draw your attention to this bit:

The lifetime should not be an aspiration for Roon subscribers. It hurts us as a company and is not a viable business model for our future. If the price increase has reduced demand for lifetime subscriptions, that’s a good thing for our business.

It’s unlikely that we’ll offer a lifetime option forever. If you enjoy Roon and believe in what we’re doing, the best way to support it is to subscribe annual. We will do our level best to earn that support for many years to come.

The annual is STILL $119 for a year. That’s $10 a month. If Roon isn’t worth $10 a month to you, then we are doing something wrong and you should go elsewhere. It certainly brings me more joy than $10 every month, and our business vision is to do the same for every one of our subscribers.

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That is super helpful. Thanks for bringing me up to speed. The fact that they are using a phrase like “junk food” makes me think that they have their heads screwed on with the correct threading.

The second thread you pasted that outlines their belief that the lifetime model hurts the company and is not sustainable means they get this. So I’ll be surprised if there aren’t more price increases on lifetime coming. Got it.

All good news that that philosophy is publicly acknowledged. Would still like to figure out revenue guesstimate and costs, but I’ll do that in private :wink:

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I didn’t purchase a life membership and instead went with yearly subscription for the reasons you have outlined also as I thought another product might come along that I preferred, been with them for 4 years now, ops should have purchased a life membership

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Do what’s most advantageous for you and your situation. But I encourage you to include in your analysis the fact that Roon becomes less useful after Roon Labs is no longer around to support it. An annual (or monthly) subscription does not guarantee that Roon will be around forever, but it helps.

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I’m 70 !, lifetime to me = 6.6 yr , ie 77 , I am already going deaf :joy:?

But seriously 120 a year is not excessive and leaves the flexibility I need. It also provides a steady income stream for Roon to manage

Imagine if there was only lifetime , a massive influx of money then “nothing’” that’s not a good business prospect

Everything else in my life is monthly or annual what’s the difference , your gamble drops to $120

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Don’t worry, it isn’t a Viktor Yanukovych, so there’s little risk she’ll steal all their money and run to Russia.

Ill be surprised if it lasts out past 2020

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I feel the lifetime offer does raise concerns for some of company stability. To me it is a form of increasing cash flow for startup purposes.

Personally, I would like to see it go away and use a K.I.S.S. pricing model. Not even an annual price. Just 9.99 a month, cancel anytime. It would attract more users as they have no risk. A model that is used by most credible companies.

My guess is they do about $8 million in annual sales. The say they have 100,000+ subscribers. Not likely they are all paying $120/year. Take out lifetime subs, and I think they also have a perpetual license embedded lite version with Elac or somebody. There are likely comps for friends, family, business partners, manufacturers, industry types, etc. So, likely less than than $12 million. If 70% of subscribers are paying annually that’s $8.4 million. So it could be more. Or less.

Another way to look at it is revenue per employee. Industry average is probably around $200K per employee. So if they have 40 employees that’s $8 million.

Nucleus hardware sales would add to their overall revenue. Hard to guess how much. But even with roon’s premium markup the gross margins are likely thinner than the software side.

Anyway, the real answer is who knows? And as you note, they aren’t obligated to tell us. But just back of the envelope guesstimating suggests they have a nice niche business. They could be making a decent profit, depending on back-end infrastructure and licensing costs, which are likely much higher for software like roon as compared to other music playback software.

Take a look at the new pricing page - monthly is there as well as an annual subscription

Roon Pricing - Starting From $9.99 / mo | Try It Free (roonlabs.com)