WordPress management site WP Engine acquires Flywheel as it moves to a $1B valuation and IPO

WordPress now accounts for 34 percent of all websites globally, and today one of the key companies that helps handle the creation and management of some of those WP-hosted sites is getting a little bigger through some consolidation in the wider ecosystem. WP Engine, which works with businesses to build and manage their WordPress-hosted sites, has aquired Flywheel, a smaller competitor.

Financial terms of the deal are not being disclosed, WP Engine’s CEO and chairperson Heather Brunner said in an interview, but she confirmed to TechCrunch that it involved her company raising a small round (amount also undisclosed) from its existing investors to help finance the deal. WP Engine’s investors include Silver Lake (which last year put a whopping $250 million into the company) along with WordPress developer Automattic, Silverton, GuidePost Growth Equity (formerly known as North Bridge) and Eric Ries (of “Lean Startup” fame).

Brunner also declined to talk valuation of WP Engine, although she noted that current annual recurring revenue is at $132 million, and that Flywheel’s is $18 million, and with a current growth rate of 50%, together the two are on track to make $200 million in ARR by 2020 and likely pass the $1 billion mark for valuation, en route to a public listing.

“It is our aspiration to build a public-ready company, and this acquisition is part of making that happen,” she said. (Ironically, that could mean that WordPress’s partner, and sometimes competitor, could go public before it does.)

The deal is a sign of some consolidation in the ecosystem that has built up around WordPress. WP Engine is a veritable powerhouse in that ecosystem, having been an early mover in the space — WordPress backed it back in 2011 — and now working on building and managing sites for some 120,000 brands and agencies in 150 countries (likely totalling multiples of that in terms of actual sites).

WP Engine, as Brunner describes it, focuses largely on mid-market and larger businesses, while Flywheel — founded and currently based out of Omaha — has focused on smaller businesses. That makes the two natural complements to each other, but Brunner notes that there will be more gained from the union.

“The team there is very product focused,” she noted. “They’ve built a suite that we feel has been focused around small agencies, but they are also the types of tools that larger agencies will benefit from.” She is referring to the product Local by Flywheel, a local development application used by more than 150,000 developers.

Flywheel, founded in 2012, had only raised around $6 million in funding, including a $4 million round several years ago. The economies of scale of throwing in its lot with WP Engine will give it a much wider exposure and access to new customers.

“We founded Flywheel with the belief that in order to help creatives do their best work, we needed to create an internal culture that encourages our employees to do the same,” said Dusty Davidson, CEO and co-founder of Flywheel, in a statement. “That philosophy has led us to build an incredible company and some of the most well-loved products in WordPress, supported by an impressive group of talented people and the most remarkable open source community in the world.”

WP Engine has made a few other acquisitions prior to this, of other partners in the WordPress ecosystem, marking it out as a consolidator in the field. Brunner noted that while some of the company’s growth efforts might lead it to further acquisitions, it is also pursuing a second track of working with third party partners and acting as the intermediary platform for companies to bring in other services in aid of running their sites. Partners in the WP Engine ecosystem — alongside WordPress itself, of course — include Amazon Web Services, Cloudflare, Google, HubSpot and New Relic, she noted.