🚘 Don’t Chip the Tesla 🪨
The year is 2011. After barely avoiding bankruptcy in November of 2008, this EV car company is showing signs of life. They debuted on NASDAQ ten months ago at $17 a share. Early backers include the founders of Google, major automotive companies like Daimler and Toyota, and Elon Musk. The latter is now the CEO and has the vision to take electric cars mainstream.
Another company, founded in 1997, makes paint protection film for cars. Thinly traded on the Toronto Stock Exchange, full-year results for 2010 just came out and showed 7% year-over-year growth on revenues of $4 million. After losing $566,000 in 2009, however, the company turned a nice profit of $426,000.
If you had invested those 2011 sales commission checks, both would have made you rich, but it’s a company called XPEL that’s delivered better returns than Tesla. (Coincidentally, many Tesla customers buy XPEL products to protect their Model 3 and Model Y luxury rides.) Research from the Alpha Letter shows the list of companies with over 10,000% returns in the last decade is relatively short – Celsius Holdings and Trxade Group are the only other two.
How did XPEL pull it off and grow enterprise value at such an accelerated clip?
🎨 XPEL Now 📈
The answer might surprise sales leaders. The company seems intent on driving bottom-line results. Profits grew to $25 million last year, or 16% of revenues. Gross margins continue to expand. Sales efficiency and product pricing appear to be rising in tandem— ultimate product-market fit with solid demand and customers willing to pay a premium.
For 2020, revenues came in at $159 million, an increase of 3,878% since 2010 and 22% year-over-year. Mild top-line results compared to 2017 and 2018 when the company saw 50-60% increased revenue. Combining growth and profitability trends, XPEL, as a manufacturer, competes with best-in-class software companies.
The company has a recently growing sales function of thirty, mostly made up of territory managers (several have started in the last year), account managers, and business development. A modest marketing team exists with someone dedicated to events. The management page shows both an SVP and VP of sales.
And they have lots of fans who leave rave reviews and write blog posts like this:
Overall, I’d highly recommend the XPEL Ultimate film for anyone looking to protect their vehicle’s paint. It can be a pricey pill to swallow, but the protection and peace of mind you gain pays for itself over and over. I’d recommend setting aside a few bucks to have the PPF applied immediately after picking up your new car, as every minute you drive without it is another opportunity to collect chips and stains that will have to be corrected!
-Ben Walters from Ben’s Car Blog
🔝 Top Line Versus Bottom Line 🔻
Investors, shareholders, and company executives can fall in love with top-line growth. Drive revenue at all costs, literally. Some famous companies like Uber, Zillow, and Slack have never been profitable – and in some circles (see venture capital) – a business reaching profitability is like waving a white flag. XPEL proves there is a path to explosive growth and value creation without losing a bunch of money along the way.
Key takeaways:
- Always validate product-market fit
- Make a great product that customers will rave about
- Believe in international markets
- Boldly increase price points
- Hire for sales last
If you’re a CEO, founder, or sales leader, please drop us a line on how you approach the top-line and bottom-line growth balance. We might share your wisdom with readers next week 🙂.
