A lot has happened since Zenefits told investors last year that its already lofty projection for annual recurring revenue would more than triple by the end of 2016. The HR software maker saw its founding chief executive officer leave under pressure from the board, paid about $1 million in fines to state regulators for selling insurance without the proper licenses and renegotiated a lower valuation with investors to avoid a potential lawsuit.

The company’s optimistic projection of $450 million for 2016 hasn’t come to fruition. Instead, Zenefits’ annual recurring revenue is about the same as it was last year, hovering above $60 million, according to people familiar with the matter, who asked not to be identified because the financials are private. Growth started slowing last year when CEO Parker Conrad was still in charge and continued to slide throughout the corporate crises and management transition.

David Sacks, who replaced Conrad in February, declined to comment on the revenue figure. “The customer base has stuck with us through the issues that have been resolved now; the customer base has been loyal,” he said.

Early on, Zenefits sold itself to Silicon Valley venture capitalists with promises of breakneck growth. Just two years after starting up, Zenefits raised $500 million in an investment round valuing the business at $4.5 billion. But that valuation has since been cut to $2 billion as Sacks tries to reset expectations. Jessica Hoffman, a spokesperson for Zenefits, wrote in an email: “The company under prior management was overly optimistic in its growth assumptions. We have taken a more conservative approach going forward.”

State Settlements

Zenefits David Sacks
Zenefits David Sacks

Sacks introduced his vision for Zenefits at a corporate event on Tuesday with a product branded Z2. The new version of its HR software will feed information directly into popular small business software, such as Intuit’s QuickBooks, Microsoft’s Office 365, Slack’s messaging app, expense report service Expensify and employee stock management software eShares. The goal is to turn Zenefits into the central information repository for any small or medium-size business. “We really redesigned Zenefits so that the whole thing works like an app store,” Sacks said.

Whether Sack’s tenure so far has been a success or failure is a matter of perspective. On the one hand, he seems to have plugged a sinking ship. He’s knocking out settlements with state regulators, one by one. He’s mitigated the risk of investors suing the company by adjusting the ownership structure and valuation of the company. He’s focused the company’s attention on small and medium size businesses, rather than on larger ones. That’s helped Zenefits keep its annual recurring revenue steady, even as the company has said it lost its largest customers.

On the other hand, Zenefits is a shadow of its former self. In part to reach aggressive targets, some sales staff violated state regulations by using a web browser plugin created by Conrad to skirt insurance broker training requirements and sold health plans to customers in states where they weren’t registered. Zenefits is now facing fierce competition from ADP, Gusto and others. Sacks, a former PayPal and Yammer executive who joined Zenefits as chief operating officer in 2014, has reduced headcount to about 950 from 1,400. That’s helped Zenefits cut cost but may also reflect diminished ambitions.

Meanwhile, Zenefits backers would have needed a road map to navigate the company’s financial estimates last year. In early 2015, it told investors that it expected to reach $127 million in annual recurring revenue by the end of that year. In May, the company lowered the projection, telling reporters that it was targeting $100 million. The company’s actual annual recurring revenue by the end of last year topped $60 million.

Annual recurring revenue is a fairly common financial metric for subscription software businesses like Zenefits. It reflects the value of the company’s current customers over 12 months. The odds that Zenefits reaches $1 billion in annual recurring revenue by the end of 2017, which is what the company forecast early last year, are basically zero. Zenefits declined to provide an updated projection for 2017.