UserTesting Stock: Using AI for Customer Market Research

UserTesting Stock: Using AI for Customer Market Research

Last month, we wrote about TaskUs stock (TASK), which offers a way to invest in a little light human slavery digital offshoring services. But the company relies heavily on a Philippines-based workforce to power its software-as-a–service (SaaS) model. There are references to artificial intelligence and automation technologies, but cheap or crowdsourced labor isn’t exactly what we want to invest in. We covered TaskUS at the request of one of our sharp-eyed readers who also helps support our team of very real human MBAs. Another reader recently tipped us off about UserTesting stock (USER). It’s another SaaS tech company that also compresses two words together to form its name. But that’s where the similarity ends.

About UserTesting Stock

Founded way back in 2007, San Francisco-based UserTesting had raised more than $150 million in funding before it had an IPO last November and added another $140 million. Just like it says on the tin: UserTesting conducts user testing on anything under the Silicon Valley sun, using its Human Insight Platform. The 30,000-foot view is that the company uses video to record customers interacting with a product, service, brand, app, or whatever. It uses AI to not only help capture and process the video but also analyze it at scale. Some actual human analytic brains are also in the mix.

Back to the basics about UserTesting stock: It hasn’t escaped the whirlpool that has sucked value out of public companies this year, especially in the tech sector. Its market cap has plummeted by nearly 60%, dropping below $1 billion, as of early June. Normally, we avoid investing in any company below that threshold, but UserTesting has some interesting things going on.

First, the company is significantly increasing revenues. In 2021, it had revenue of $147.4 million, up 44% from the year before at $102.2 million. Second, it derives more than 90% of its revenue from yearly subscriptions, billing for its non-cancelable services in advance. That’s very much unlike TaskUs. Third, market research is a big market itself, with Statista claiming a total addressable market of more than $75 billion. Bonus: UserTesting went public through a traditional IPO rather than yet another dodgy merger with a special purpose acquisition company (SPAC).

Before we dive further into the financials, let’s try to understand a bit more about what UserTesting does and how it does what it does using AI. ..... '