Neat, after period of organizational changes, seeks broader market; Partners with HP on productUpdate 11/5: Announces new CEO

Tom Paine

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The Neat Company and HP announced in late September that HP was bundling Neat's Smart Organization System, the cloud-based scanning and information extraction and storage tool, with HP's Officejet 8040 printer. The partnership is a first for Neat, which has sold its products separately through retail and online channels in the past. Neat is not contributing any hardware, but only its cloud software service.

The HP Officejet 8040 with Neat e-All-in-One Printer is available in the United States for a starting price of $399 in retail stores and online. That includes a three-year subscription to the NeatCloud service.

The recently announced intent to split HP into two companies is not expected to have any impact on the product, which will fall under HP's proposed Printers and PC business.

Whether the bundling of its products with others will be a major boost for Neat remains unclear, but the HP arrangement continues a shift away from hardware towards software which has been occurring for some time, although Neat Vice President-Product Management Chris Barbier stressed in an interview with Philly Tech News that it is still very much in the hardware business and the HP offering doesn't replace any existing Neat product.

Neat has gone through many changes over the past two years, since reporting revenue of $110 million in 2012. Almost the entire senior management team has turned over, and Ron Kaiser, a board member since 2012 who has served with other Edison Partners (Neat's principle investor) ventures, replaced Jim Foster as interim CEO late last year, though Foster is still on Neat's board (correction: Foster is no longer on the board, though the company tells me the relationship is amicable). A Neat spokesperson tells me a new permanent CEO will be named soon.

Comments on Glassdoor (admittedly not always a reliable indicator) do suggest with some consistency that 2013 was a rough year organizationally and financially, although no update on the financial picture was offered by the company. But it did provide this response to my inquiry:

"Last year Neat accelerated the company’s efforts toward its cloud strategy – opening up an entirely new chapter in the company story. The release of NeatConnect (already one of the Nations’ leading Wi-Fi scanners) and the advancement of NeatCloud and Neat’s mobile application took precedence over our traditional hardware and desktop software. Integrating our cloud capabilities into other manufacturers’ hardware is another example of our evolved approach. That evolution has been reflected in the changing interests and skill sets of the Neat team over time.”

Neat's total customer base, I confirmed, has roughly doubled from the 1 million that it indicated it was at when I spoke with them about two years ago.

Bsrbier said Neat is placing more emphasis on the SME (small and medium enterprises) segment in addition to the SOHO (small office, home office) segment, but is not going after the large enterprise segment. The HP announcement seems targeted more at the SOHO market, though. I see some indications that Neat might be over its rough spot (though no confirmation), and its WiFi-enabled NeatConnect product introduced late last year was well received. Barbier indicated Neat may expand its applications to encompass other accounting and customer relations management tasks.

Edison could be looking towards a future exit strategy for Neat, though I'm not sure if Neat is a strong enough or broad enough standalone play for an IPO right now. Perhaps a sale to a larger company could occur, but a combination of companies with complementary technologies serving the SOHO & SME markets might be intriguing. In the mean time, it might try more joint product partnerships.

Update November 5: Neat names Jeff Dickerson Chief Executive Officer.

Update November 11: Neat Announces Seamless Integrations with Intuit’s QuickBooks Online

Neat: 2012 revenue over $110 million; 57% growth

Tom Paine

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Philadelphia-based Neat (FKA NeatReceipts), a pioneer in providing tools for scanning and digitizing paper-based information such as business cards and expense receipts, crossed the $100 million revenue threshold for the first time in 2012, according to a press release from the company today.

Neat said its revenue surpassed $110 million in 2012, growing 57% over the prior year. The company said it also achieved its third consecutive year of profitability, and grew its customer base by 30% to 1.3 million.

Neat introduced its NeatCloud and NeatMobile services in the third quarter of 2012, and while the company said that 70% of those who signed up for a free 30 day trial subscription became paid subscribers, it doesn't indicate how many customers that involves or how much revenue they generated. Among other benefits, Neat's new offerings enable greater integration of paper-based and digital-based information sources.

Neat also opened a new call center facility in Center City Philadelphia, and said it added new retail distribution partners and strengthened its relationship with other existing retailers.

Neat is expected to make some announcements from CES '13 in Vegas this week. I plan to follow up with more details.

Neat's principal investors have been Ben Franklin Technology Partners SEP, MentorTech Ventures and Edison Ventures. Its CEO is Jim Foster.



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The Neat Company adds new Center City Philadelphia office location, with room for up to 140 employees

Tom Paine
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The Neat Company, which provides scanning products and services for items such as receipts and business cards, announced yesterday that it had opened a second office in Center City Philadelphia that essentially will serve as a call center for inside sales and customer service, configured for up to 140 employees. The new office is located in the Ten Penn Center building at 1801 Market Street. Neat's headquarters, located at 1601 Market Street, houses about 80 employees, and 40 are already working in the new office. Neat expects that employment at the new location will grow to exceed 100 people over the next several months. Neat moved its headquarters from West Philly to Center City last year.

The expansion reflects two factors, Neat's Chief Marketing Officer Kevin Garton told me in a phone interview. One is a strategic decision by the company is to take all sales and customer service-related functions in house, where some had previously been outsourced, and to make a long-term commitment to centralizing all its operations in the US, and in particular the city of Philadelphia. (The company does contract out manufacturing of its NeatDesk and NeatReceipts hardware products and most of that is done in China.) "While some companies decide to move sales and customer service teams offshore, we felt it was important to support local jobs and stay in Philadelphia", Garton said in a prepared statement. Neat will receive some tax credits related to job training for adding jobs in the city.

The second is the continuing growth of Neat, accelerating since the introduction of its cloud and mobile offerings (NeatCloud and NeatMobile) in July. The new products open the potential for Neat to significantly expand its customer base, and favor the use of a more direct channel with customers and prospects. Garton says Neat ran out off space long before it expected.

Garton declined to reveal how the cloud and mobile offerings were selling so far, but did say more details and additional product enhancements would be announced at CES 13 in January.

In an interview last December with the Philadelphia Business Journal, Neat CEO Jim Foster said he expected 2011 revenue to exceed $65 million, and estimated that revenue growth this year would be 40%. He also said the company had been profitable in 2010 and 2011.

Neat's principle investors have been Edison Ventures and MentorTech Ventures. It was founded in 2002 by Rafi Spero and his father, serial entrepreneur Les Spero, who are still major shareholders.



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Neat Company releases NeatMobile for Android

Tom Paine

In July, I wrote about Philadelphia-based Neat Company, the pioneer in providing technology for scanning and digitizing information from paper sources such as receipts and business card, launching its first mobile app, NeatMobile for iOS, and its cloud-based offering, NeatCloud. On Wednesday, Neat released NeatMobile for Android into general availability.

NeatMobile for Android includes the same features as the iOS app:

Acquire - Users can quickly capture important information by using the camera on their smartphone.

Sync - NeatMobile for Android automatically synchronizes with all other versions of Neat's Digital Filing System including Neat's desktop software, NeatCloud, and other mobile devices - ensuring that all content is accessible from anywhere.

Access - Android users can now use their mobile devices to quickly view all the information in a Neat Digital Filing System while on the go.

Search - NeatMobile for Android leverages OCR and parsing to transform information in the Neat Digital Filing System into searchable data. In addition to OCR and parsing, NeatMobile users can also signup for NeatVerify, a monthly subscription service that ensures that data taken from images is 99% accurate.





NeatMobile for Android is free for subscribers to the top two tiers of NeatCloud service ($15 to $25 per month). It is available for download from the Google Play store.

The company had told me it had sold about 1 million total units of its NeatReciepts handheld scanner and NeatDesk desktop scanner combined prior to releasing NeatMobile and NeatCloud in July.



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The Neat Company introduces its first Cloud, Mobile offerings

Tom Paine

Philadelphia-based The Neat Company, the pioneer in providing technology for scanning and digitizing information from paper sources such as receipts and business cards, today announced the general availability of NeatCloud and NeatMobile, two products that could potentially be transformative for its business, said Neat Company Chief Marketing Officer Kevin Garton in an interview with Philly Tech News. The products had been previewed in January at the Consumer Electronics Show in Las Vegas, and have been in private beta since.

NeatCloud will be priced at three tiers between $5.99 and $24.99 per month depending upon the number of users. It is intended to be a cloud-based digital filing system not only for data that originates from paper sources but also for other data that comes directly from digital sources. It will run off the Amazon Web Services (AWS) S3 platform.

NeatMobile, which will initially be available for iOS only (an Android version is scheduled for August, the company says), will enable users to take photos of paper documents with the cameras in their mobile devices, from which the content can then be converted into digitized information fields using optical character recognition (OCR). It is available for download from the Apple App Store and is available free of charge to those subscribing to the two highest tiers of the NeatCloud service.







Among the features of its Digital Filing System Neat emphasizes are its abilities to sync Neat data across all devices, to share files or folders with whomever one chooses, to create Neat email addresses through NeatCloud and request vendors or others send receipts or documents directly into your Neat Digital Filing System, and secure backup.

Another feature of NeatCloud is its expanded search capability, through which Neat users can now find information they may have stored in multiple cloud services including Google Docs, Dropbox and Evernote. Users can search across their different cloud services from a single Neat interface.

Neat is also introducing NeatVerify, a subscription service somewhat like that provided by LinkedIn's CardMunch. Blurry or faded images that can't be deduced through OCR receive human verification if necessary.

These new offerings by no means replace Neat's existing NeatDesk and NeatReciepts scanner products, although I could see the possibility of that eventually largely being the case. NeatDesk retails for about $400, NeatReciepts for about $200. The company says it has sold about 1 million of the two devices combined. The aspect that would be difficult to replace would be NeatDesk's capability for scanning a large volume of documents. But for many smaller customers, NeatCloud and NeatMobile could provide the complete solution. Overall, the new offerings should make Neat more hardware independent and more retail channel independent in the long run, and give it greater potential for broadening its customer base.

Garton said while there are other larger players in the Cloud document repository and backup market, Neat planned to focus primarily on the applications it (and its software) know best: receipts and business card information. However, moving into the Cloud should give Neat considerably more ability to integrate that information with other sources and collaboration tools. Garton also said Neat would continue to concentrate on the Soho (small office, home office) market.

After hitting a brief trough in 2009 following several years of rapid growth, The Neat Company's 2010 revenue was $33.3 million, according to its listing in the 2011 Inc. 5000. An article in the Philadelphia Business Journal in late 2011, citing CEO Jim Foster, said 2011 sales were expected to reach $65 million with additional growth of 40% anticipated in 2012. However, the turn towards mobile apps for handling the types of things Neat Company does in turning paper input into digital information has been dramatic in recent years, presumably necessitating Neat's response with the new offerings.

Edison Ventures has been the primary investor in The Neat Company, along with MentorTech Ventures.


Neat press release



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