And not by me, but by the senior management team that came to me and asked that we postpone our Christmas party until 2026 so they could, and I quote, "Smash their targets." Well, smash their targets they did. Q3 was the single strongest quarter of organic growth in the company's history. What makes that even more powerful is Q3 is a tough quarter. Like, there's Thanksgiving, there's Christmas, there's peak retail spend, the end of the American financial year. I mean, there's unprecedented uncertainty in the United States. It's tough, and yet, you know, we know there's no excuses here at Black Pearl. Like, it's win or die, and this quarter we won. That growth that we got represents our venture strategy in action.
Three high-value products charging forward in unison, and this is a direct result of last year's hard work, and there was a lot of hard work. There were tough decisions, and there was relentless pressure we put on ourselves. And of course, this has all been made possible from the tremendous support that we got from shareholders, and this victory is in part because of you. What I'm proudest of is how the team executed in Q3, and it's not just the increase in revenue, it's about increasing quality. You know, we've continued our planned evolution from uncontracted monthly SaaS to contracted annual SaaS and Data as a Service we call DaaS. Now, at this time last year, Data as a Service revenue was nil. Zero.
Accounted for none of our ARR, and today it's approaching 40%, and after 8 months, the churn is still nil. If you could move a slide forward there for me, Tori. One further slide, thank you. There we go. Well, I don't think I've ever considered a financial graph sexy before. There's a first time for everything, right? You know, Q3, I'm gonna get in trouble for that, no doubt. Q3 growth is, of course, 100% organic. You know, last quarter we had, you know, as you can see, a step-jump change as well, but part of that, you know, a portion of that revenue was via acquisition.
So it's important to note that we don't acquire companies for the revenue that they, they had made, we acquire them for the revenue they will make as part of the Black Pearl Group. On that front, the B2B Rocket team delivered. Rocket by name, rocket by nature. In just four months since they became part of the group, they've completed their first wave of integration into the group. They're bringing our valuable Pearl Engine data into their application, and that has radically increased the value of the service that they're now providing customers. And because of that, the average revenue per new customer they're bringing on board is annually contracted and fivefold the average revenue per customer. Now, Bebop and Pearl Diver, they did not miss the party either.
They both had massive contributions to revenue in both contracted SaaS and Data as a Service, and that is why Data as a Service is now such a meaningful part of our revenue composition. Now, as we've previously communicated to the market, our strategy is focused on high-value revenue. That is contracted Software as a Service and Data as a Service today, and then ultimately, in the future, Platform as a Service. This strategy represents a fundamental reality. AI is radically lowering the barriers to entry for traditional SaaS. This makes deeper customer integration, proprietary data, and relentless evolution your primary sources of defensibility in the modern world. Now, this isn't to say that non-contracted SaaS revenue is without value for Black Pearl Group. Far from it.
It's a big part of why we have such strong CAC payback periods, such efficient revenue per employee, and such proven success in acquiring Data as a Service clients. But, as always, I'm getting ahead of myself. I'm now stealing some of Karen's thunder, so, over to you, Karen.
Thanks, Nick. ARR closed at NZD 23.7 million, which is up 114% year-on-year and 22% quarter-on-quarter. This is strong organic ARR growth, and what I'm most happy about is that this has been delivered through our seasonally toughest quarter. From my perspective, the most exciting part is the improving efficiency as we grow and the quality of that growth as we scale. This is shown in our ARR per employee increasing to NZD 306,000 per employee, and our CAC payback period improving to 3.9 months. Both are clear signals of our improving operating leverage and continued discipline and efficiency as we scale higher-value customers and contracts and integrate the platform across all the ventures. On churn, Data as a Service churn remained at 0%.
Data as a Service has contracted data that is embedded into customer workflows. SaaS churn was seasonally elevated in the December quarter, consistent with normal year-end patterns and the roll-off of our lower-tier customers. We expect churn to normalize next quarter. As a reminder, last year's churn went from 9.4% in the third quarter to around 4% in each of the next three quarters. Overall, this quarter has shown strong organic ARR growth and improving efficiency, and we remain focused on scaling sustainably as we work towards our next major milestones. My focus as CFO for the coming year is efficiency, execution, and being ruthless about cash utilization. I'm not an accountant called Karen for no reason. On the next slide, I'll briefly explain this diagram because it's central to how we think about revenue quality and lifetime value across the group.
We do things a bit differently here at Black Pearl, which won't surprise people. In traditional sales funnels, there are leads and opportunities that are filtered out through the sales process to eventually become paying customers. At Black Pearl, the top stage of our funnel contains paying customers, labeled here as uncontracted SaaS. These are typically customers engaging with us through shorter duration marketing campaigns. Importantly, this layer is not loss leading. It has really attractive economics in its own right, with a 3.9-month CAC payback and approximately 1.5-2 x the ROI. This segment is cash generating and effectively funds itself. The key point that this is not the end state. The purpose of this funnel is ascension.
Uncontracted SaaS gives us a highly efficient entry point to identify the highest potential customers and graduate them into more durable and highly valuable revenue streams, i.e., contracted SaaS, Data as a Service, and eventually, Platform as a Service. As customers are seen through the funnel, contract sizes increase, our products become more embedded into their workflows, retention strengthens, and lifetime value increases. The unit economics improve as we move from our lower price point activation into higher price and much longer lifetime value contracted platform relationships. So what this graph illustrates is disciplined, repeatable pathways, where acquire customers efficiently at the top, and we scale through deeper integration over time.
In short, we are building a highly efficient model designed to convert early engagement into high quality, longer-term recurring revenue, finding customers that can ultimately be worth up to 100 times more than their original price point. Back to you, Nick.
Thank you, Karen. I'm not gonna be able to beat that line. That soundbite's amazing. I'm not called Karen the accountant for nothing. All right, thank you. NZD 30 million ARR, the Black Pearl Group, now is no longer a target, it's an outcome. What will matter, and what will define our success from now is how we achieve it. Each venture is now driving hard towards positive EBITDA growth, right? Not just top line EBITDA growth. In fact, Pearl Diver as a venture is so close it can almost smell it. We have that re-energized focus on bottom-line growth, and in fact, that's where our key leadership's KPIs lie. Now, of course, we're gonna continue to invest and build on our proven track record of innovation.
Well, of course, we've released two products in the last 24 months, and we can see how much revenue they've been able to generate in a comparatively short period of time. And the great thing for us is every day, our core asset, the Pearl Engine, it grows in value. It's now ingesting 25 billion sales and marketing data signals daily. That is the key to our future successes, 'cause as I mentioned earlier, relentless innovation is one of the pillars of longevity. Right now, our immediate focus is on lethal execution. Our key imperatives, as you heard from Karen, is cash efficiency and quality, cash quality, cash quality, cash quality, and well, of course, hypergrowth, because, you know, after all, we did still post 114% year-on-year growth. Thank you. Over to you, Simon, for questions.
Great. Thanks, Nick. Thanks, Karen. First question: Could you please provide a breakdown on the ARR growth across the product group, and has the Bebop run rate continued?
All, all products contributed. We don't haven't presented to the market a breakdown by product, but one of the things that we are moving to start giving better visibility over on the quarterly updates is breakdown in revenue by class of revenue. As Karen was talking about before, that is uncontracted SaaS, contracted SaaS, Data as a Service, and eventually Platform as a Service. But I can tell you, Bebop had a awesome contribution, like all three ventures contributed to that result.
Thanks, Nick, and along the same lines of that question, what part of the growth in the quarter was driven by DaaS, and what does the pipeline look like now?
Pipeline looks awesome. They actually finished on the Data as a Service platform, like the pipeline, and I'd argue they were probably unlucky not to get a few more on the other side, but the result was good enough, as it was. It looks really good. It continues to grow, and I'd love to actually go back and see comparatively last quarter. I don't have the number, but, you know, obviously, we've laid in several Data as a Service deals last quarter, and you can see now that percentage of, you know, group recurring revenue now is, yeah, 36%. So that's quite an impressive growth trajectory, and that will continue to be a big part, you know, growing part in the mix of our revenue composition.
Thanks, Nick. What was the organic ARR year-over-year and quarter-over-quarter, if you have it off the top of your head, Karen?
I don't have that on hand, but obviously this whole quarter was all organic growth. Last quarter, we had a lot of acquisition ARR from the purchase of B2B Rocket. But no, we're definitely now focused on organic growth for the coming year.
Yeah, it's probably something that's reasonably easy to work out in the sense the only quarter we've had non-organic growth was last quarter, Q2. Sorry, Q2, not last quarter, it was Q3. So Q2, and it was about 60% of that step jump you saw there was, I think it was about 60% was acquired through, you know, bringing in B2B Rocket, but we still actually had pretty good organic growth, Q2 as well. So our bias, to be clear, we're heavily, heavily biased to organic growth. The only reason, again, I sort of mentioned before we go through acquiring a business is for a collapsing time. You know, like B2B Rocket have great technology, but it's not technology we couldn't have engineered, but that would have taken time and money and distraction of getting into this.
And then the other advantage, of course, when you're bringing in, you know, a company like B2B Rocket, is the team. Just an ultra aggressive, fast-moving, hyper fast-moving team, and that's why you do these acquisitions. The little bit of revenue that comes with it is nice, but it's not why we do these things.
We haven't given any projections on this, so just be careful how you answer it, but when are you expecting to hit free cash flow break even?
Yeah, obviously, a super important question you could see probably from what Karen and I reiterated, you know, a major driving initiative within the group at the moment. The way that we've always thought about, kind of look like cash break even, cash neutrality is based on milestone investing. So that, weirdly, the first time we could have done that is when we got to around NZD 3 million ARR, again, around NZD 10 million ARR, and then we decide to go into a loss, like, loss making cycle because we think we can achieve, you know, stellar growth in an efficient way, and that's what we're moving through at the moment. Realistically, it's, you know, you can, anyone can do the napkin math.
It's around, you know, sort of around that NZD 30 million mark if we continue to be efficient, if we don't do any other acquisitions or don't launch new products into market, it lands around there. So, you know, the key thing for us is that, we, you know, we don't have any real intent. We need to be doing great with the cash we've got, and we know that if we come back to the market and want more cash, it is just going to negatively impact the stock price. And one of the things I think of all the great things in Black Pearl at the moment, one thing is not great is the stock price. No CEO should never complain, it's just an observation.
And obviously, part of that is we've been raising capital lately, and so this is now using that capital to grow, you know, and use it very wisely.
Thanks, Nick. Well answered. Congratulations on the team, exceptional outcomes. How do you communicate value to your customers and create stickiness for retention?
Yeah. So, that is, that is an awesome question, and it varies per, it varies per product. I could go on for half an hour here, and everyone knows I'm not succinct with words, but I'm going to do my best. So we think about Data as a Service. That's actually a very interesting one because you've got kind of two customers under that. You've got the digital agency or marketing agency who are paying us, and then behind them, you've got their clients. So there's two magic numbers when you think about them. The first is, the.
I'd argue the most important of the two is, although Trinity, the CEO of Pearl Diver, may argue this point, but the end customer, like the customer's customer, how you measure their success is the amount of conversions from marketing campaigns run by Pearl Diver data, times the average version of that campaign, the average value of that campaign, sorry, versus what the Meta algorithm, number of conversions, times the value of those conversions. So it's like a quantity and quality or quantity and value versus the algorithm. Secondly, down that is, sometimes the partners aren't running any traditional algorithm campaigns, so it's just Pearl Diver, in which case you're looking at the value of ROI from our campaigns versus what the customer is paying our partner.
They're both really easy to determine because, you know, obviously, we've got deep integrations in with Google and provided the customer has put in, custom, conversion tracking, which obviously is marketing agencies, expert agencies, they do. You get great visibility over that. Second one is, is our customer making money? Is our partner making money? And that's a simple equation. It's we can see how many, end customers they have on, on the Pearl Diver service, times the average value of the package they're selling. When it comes to B2B Rocket, again, what they're solving for is people that need more demos. They need more inbound people to communicate with. Simple, simple thing is the average amount of demos that are coming in, per month. You can see the positive replies, all right?
You can do that at either the average cost per, the average value per demo, divided by the amount of, what their close rate is, or you can do it on the industry standard. I mean, typically in the U.S., getting a booked demo will cost you around $1,000. That's unit metrics down. You've got B2B Rocket's package now at $5,000, you know, five demos out of what they're doing, kind of meets industry standard, and obviously the team, you know, radically looks to radically smash that and provide phenomenal return on investment. Bebop is around integrating these leads into, businesses' existing CRMs, and you can track attribution all the way down to closed.
So I guess the point is, out of that long-winded response that was tough without having those formulas in front of me, is everything's down to absolutely hard numbers. Now, I would say that's a well, when I talk about quality, that's a huge focus for us this year. I think, like in past years, we've been guilty of not not being deep enough or kind of brutal enough about seeing every customer in real time and knowing they're making money. And one of the mantras for the venture team this year that I've laid upon them, as I said, like, no customer cancels a cancels a service that's making them money. Ultimately, we know that the world's going to get tougher, right?
You want to make sure that you're making customers money, and so we need to see that in real time. It's a big focus, but also, you know, we're in a good position.
Nick, does the improvement in CAC payback period ahead of expectation partly reflect lower marketing spend than expected?
A little bit, but it's not the kind of main part. So part of the strategy the team did is actually open the funnel up a little bit more, which is what Karen was talking about before. I think is an interesting thing, and I'll probably have to keep touching that on a couple of future other webinars, because obviously people see a churn of eight-point whatever % it was of that uncontracted SaaS, and like, "Oh, that's terrible." Well, I don't care about those clients as much as I care about the Data as a Service clients, but how we find those Data as a Service clients is through that. So the bigger you open that funnel, the more Data as a Service will pop out the bottom, and what the team did is actually open that up.
What that successfully does is actually lowered cost of advertising a little bit because we're having to be a little less niche, and then we can see all those Data as a Service falling out, underneath. So, yeah, that's probably a little bit how we why the CAC was so efficient, on that particular month. The other part of it as well, just to kind of set some expectations moving forward, is obviously in some areas, we've taken the investment money that we've just raised last year, and we're scaling up operations in a, you know, in a few areas. So you probably the full costs haven't quite hit in on that comparative to the some of the value that got shaken out of the pipe.
But, you know, we're always around 4-4.5 months, always have been any which way, so, you know, that's a huge strength of our business model and the products. We eat our own dog food in big portions.
Thanks, Nick. Are you seeing any change in competition in the U.S., and do you compete with Zeta Global?
Zeta Global, I'm aware of as a name. I think that was Sculley, the ex-Apple guy that was Pepsi or Coke before that. No, we haven't competed with them. You're dealing with a lot of, like, it's a fragmented market, and again, what I kind of mentioned before is AI radically reduces barriers of software creation, where the competition, you know, there's all these other areas that you compete in. I don't feel like we're ever in a dogfight in a sale. What we're trying to mostly, w hat our big competition is, is lethargy or people that, you know, haven't experimented outside of sales as status quo. You know, like, for example, with Bebop, I mean, it's essentially vibe prospecting.
You know, it's a very different way of prospecting, and if you're used to a traditional way of prospecting, that can take a bit to get your head around. So that's probably your biggest competitor, is doing nothing. With Data as a Service, what we often get is people that have tried unprocessed data in the past. They've gone to, like, a data supplier and, you know, all those ones that you read about, and they've absolutely just burned their money because, you know, they don't have the processing chops or anything in the middle to push through that ocean of data to find where the value is, and that's a huge part of what we do. We have unique data, absolutely. The key part is obviously processing through that in real time to find the actual people that are buying, and that's a, that's a real art form.
So not too many people that I'm aware of are doing that as well. So competition, not a big thing, but that means you don't take your position for granted. You've just got to keep innovating and keep getting better each month.
Nick, and last question. 3-5 years is quite a gap between where Black Pearl is now and NZD 50 million ARR. Is there an expectation of nominal month-on-month growth in dollar terms slowing down across the next 3-5 years?
We've never, we've never, ever gone to the market and said something that we haven't hit. Like, the reason why, I guess, some people today would be hearing a little bit about that sales funnel for the first time is we've been working on that for a year, but until we've actually got the data and everything through, and you can hand on heart know what you're doing, then, you know, I don't- it doesn't come out of our mouths. Which is why if you go back and look at everything we say, we end up doing everything we say we're going to do. What I have said is that we feel, obviously massively confident about getting through to that NZD 30 million mark in a, in a, you know, what I think is a reasonably short period of time in the business world.
That we know that getting there gets us around that, cash neutrality point of view, which is super important. And we know that that kind of velocity just continues through. I mean, it's not a full stop. It's barely even a drinks break during the, you know, during the first innings of a test, man, you know? We're just gonna blast through that, but I don't wanna go and say to someone, "Oh, we'll be at, you know, NZD 50 million in two years," or anything like that until I know 130% that we're there. But there won't be a slowing down of velocity in a material way. We're you know, we've got a great machine, and we're confident in our in our ability of maintaining that.
Thanks very much for that, Nick. That concludes the Q&A segment. I might just hand it back to you for closing remarks.
Oh, man, I don't know. You're throwing me. Oh, I think you did this-
Uh.
To me last time as well, mate.
Yep.
I forgot all about it.
Get used to it.
Yeah, I just wanted to thank everyone. Well, firstly, I just wanna say Happy New Year to everyone, and secondly, I just wanted to thank everyone for the amazing support we got last year. I've tried to thank everyone on an individual basis, but, you know, we have, like, you know, so many shareholders now, and the thing. You know, these results, and I've received so much great feedback in from so many people, which we appreciate, and this is only made possible because of the support, the investment capital and the whole kind of, you know, when they say it takes a village to raise someone, or in this case, with Black Pearl, it's not just the team in here, it's the wider, you know, cohort of everyone that's made this possible. So I just wanted to thank everyone.
We are massively looking forward to this year. I've never, ever looked forward to a business year more than I have on this one. The team is really charged up. You know, we've got, we've got great capital behind us, great momentum, and, you know, as I said before, it's now just all about execution, and we're looking forward to it. So, Ad astra. Thank you very much.
Thanks all for joining. Thanks [inaudible] .