Zenoti bets big on AI as profitable software maker expands beyond beauty sector and into gyms

Zenoti, the Seattle-area enterprise software maker that sells to spas and salons, is investing heavily in artificial intelligence as it looks to infuse more automation across its platform.

The company is also learning how to pitch new AI features to customers.

“When we start talking about AI, people don’t want to listen,” said Zenoti CEO Sudheer Koneru. Instead, he says they want to hear about the actual impact and higher profits.

“We’re not trying to say, ‘come buy us because we are AI,'” Koneru said. “We’re saying, we’ll help you grow.”

Zenoti itself continues to grow, with revenue increasing nearly 40% last year. The company, which hit a $1.5 billion valuation in 2021, is profitable. It has nearly 30,000 companies using its software and employs 1,200 people worldwide.

Salons and spas use Zenoti to help run their business, from booking appointments, managing payments, and running marketing campaigns.

This year the company is focused on a recent expansion into the fitness sector, targeting gyms that have similar needs.

“There is no good enterprise-class solution which serves that segment of the industry,” Koneru said. “What made us win in the salon and spa space is probably going to pan out.”

The broader beauty and wellness market didn’t see much growth last year, but larger brands that Zenoti targets are expanding, Koneru said.

Zenoti has plenty of competitors pitching similar software solutions but the company has been able to maintain an edge by focusing on helping customers boost revenue, Koneru said.

AI is certainly part of that strategy. Zenoti developed an AI assistant called Zeenie that can automate various tasks, produce reports, find information, and create marketing content.

It’s also launching what Koneru calls an “AI receptionist” that can handle phone calls to and from customers. And it’s using predictive analytics — based on a massive amount of data it collects across its customer set — to help companies forecast demand and make appropriate workforce changes.

Zenoti has hired several new execs over the past year, including Chief Financial Officer Sean Blitchok; Chief Customer Officer Steve Hudek; and Senior VP of Marketing Doug Sechrist. In 2023 it added Neal Singh, former chief operating officer at Icertis, as president and COO.

Koneru, a former Microsoft leader who helped start Zenoti in 2010, said the company would be open to raising more cash for potential M&A opportunities. He added that Zenoti is “the kind of company which is capable of going public,” but said his team is heads down for now focused on growth. The company has more than $40 million of cash in the bank, Koneru said.

Zenoti’s investors include Advent International, TPG, Tiger Global, Steadview Partners, Norwest Venture Partners, Accel Partners, and others. Total funding to date is $330 million.