SaaS multiples are looking good

Publicly traded revenue multiples, in our view, are by far the best metrics to determine: i) where valuations should be now for Series A/B companies and; ii) where valuations are trending.  Right now, the data is showing us that for SaaS companies, the revenue multiple at 6.80x trailing twelve months revenue is the highest it’s been in years.  That means it’s a great time to raise money or sell your business. 

 

What are revenue multiples? As a quick refresher, the revenue multiple is determined by dividing the value of the business by the latest revenue.  So if the business is worth $5mm and revenue today is at $1mm, the revenue multiple is 5x.  By knowing what the honest multiple is for other companies that are similar to yours, I can then value your business by applying that same revenue multiple to your business.  It’s not perfect for many reasons (large public companies are far different than small private ones), but it is the most unbiased and honest way to value a business. 

 

Below is the data for 75 publicly traded SaaS companies we track.  As you can see, the latest revenue multiple we see is 6.80x on median and 6.81x on average.  That median is the highest it’s been since Q4 2014 when we started tracking the data.  Since Q4 2014, the range of medians has been 4.54x to 6.80x, with an average of 5.86x. 

 

    TTM TTM  TTM    Market       EBITDA   Q1 2017
Name Ticker Revenue EBITDA FCF   Cap Debt Cash EV Calc Margin   EV/Rev
2U TWOU $223 -$18 -$13   $2,430 $14 $143 $2,301 -8%   10.31x
Athenahealth, Inc. ATHN $1,150 $128 $169   $5,590 $280 $71 $5,799 11%   5.04x
Bazaarvoice, Inc. BV $202 -$5 $15   $400 $32 $91 $341 -2%   1.69x
Benefitfocus, Inc. BNFT $243 -$13 -$10   $1,130 $109 $58 $1,181 -5%   4.87x
Box, Inc. BOX $426 -$116 $12   $2,600 $80 $183 $2,497 -27%   5.87x
BroadSoft, Inc.  BSFT $348 $26 $67   $1,350 $204 $300 $1,255 8%   3.61x
Castlight Health, Inc.  CSLT $107 -$50 -$34   $548 $0 $103 $445 -47%   4.17x
Cornerstone OnDemand, Inc. CSOD $435 -$42 $43   $2,300 $241 $290 $2,250 -10%   5.17x
Five9, Inc.  FIVN $171 $3 $7   $1,210 $46 $56 $1,199 2%   7.01x
Hortonworks, Inc. HDP $199 -$233 -$56   $859 $0 $84 $775 -117%   3.89x
HubSpot, Inc. HUBS $294 -$36 $35   $2,650 $1 $123 $2,528 -12%   8.59x
LivePerson Inc. LPSN $216 $6 $0   $795 $0 $54 $740 3%   3.43x
LogMeIN, Inc. LOGM $618 $128 $221   $6,140 $0 $286 $5,855 21%   9.48x
Marin Software, Inc. MRIN $93 -$9 $4   $45 $3 $33 $15 -9%   0.17x
Medidata Solutions, Inc. MDSO $509 $77 $106   $4,500 $271 $367 $4,404 15%   8.66x
MobileIron, Inc. MOBL $172 -$50 -$1   $419 $0 $89 $330 -29%   1.92x
New Relic, Inc. NEWR $263 -$49 $19   $2,560 $0 $206 $2,354 -19%   8.93x
Proofpoint, Inc. PFPT $442 -$17 $135   $3,750 $378 $429 $3,698 -4%   8.36x
Qualys, Inc. QLYS $205 $49 $83   $1,490 $0 $245 $1,245 24%   6.08x
RealPage, Inc. RP $593 $89 $141   $3,200 $121 $60 $3,261 15%   5.50x
RingCentral, Inc. RNG $405 -$12 $34   $2,620 $0 $150 $2,470 -3%   6.10x
salesforce.com, Inc.  CRM $8,860 $445 $2,340   $6,465 $2,540 $3,220 $5,785 5%   0.65x
ServiceNow, Inc. NOW $1,630 -$32 $546   $1,871 $1,140 $1,690 $1,321 -2%   0.81x
Splunk, Inc. SPLK $1,010 -$288 $208   $8,320 $84 $1,090 $7,314 -29%   7.24x
SPS Commerce, Inc. SPSC $207 $23 $28   $992 $0 $158 $834 11%   4.04x
The Ultimate Software Group, Inc. ULTI $823 $63 $167   $6,720 $9 $84 $6,645 8%   8.08x
Veeva Systems Inc. VEEV $582 $141 $177   $8,920 $0 $664 $8,256 24%   14.18x
Wix.com Ltd. WIX $356 -$39 $66   $2,790 $1 $186 $2,605 -11%   7.32x
WorkDay, Inc. WDAY $1,700 -$242 $366   $21,080 $541 $2,120 $19,501 -14%   11.47x
Zendesk, Inc. ZEN $337 -$84 $27   $2,900 $0 $248 $2,652 -25%   7.88x
Secureworks SCWX $443 -$27 -$10   $887 $0 $92 $795 -6%   1.79x
Appfolio, Inc. APPF $115 $0 $16   $1,190 $0 $27 $1,163 0%   10.15x
Atlassian Corporation TEAM $620 -$16 $199   $8,070 $0 $550 $7,520 -3%   12.13x
Twilio TWLO $305 -$41 $7   $2,640 $0 $289 $2,351 -13%   7.70x
Instructure INST $122 -$49 -$31   $934 $0 $39 $895 -40%   7.37x
Mindbody, Inc MB $160 -$9 $4   $1,200 $15 $224 $991 -6%   6.21x
Shopify SHOP $444 -$30 $17   $9,100 $0 $396 $8,704 -7%   19.60x
Xactly XTLY $97 -$12 $1   $504 $13 $44 $473 -13%   4.88x
Nutanix NTNX $681 -$351 $10   $2,560 $0 $350 $2,210 -52%   3.25x
Apptio APTI $168 -$23 -$2   $705 $0 $111 $594 -14%   3.54x
Blackline BL $135 -$14 -$2   $1,990 $0 $101 $1,889 -10%   13.97x
Coupa Software COUP $145 -$32 -$4   $1,620 $0 $238 $1,382 -22%   9.51x
Okta OKTA $182 -$86 -$37   $2,090 $0 $224 $1,866 -47%   10.28x
Alarm.com ALRM $276 $47 $23   $1,760 $74 $63 $1,771 17%   6.41x
Alteryx Inc AYX $96 -$20 -$4   $1,180 $0 $164 $1,016 -21%   10.58x
Amber Road AMBR $75 -$12 -$2   $254 $24 $15 $263 -16%   3.52x
Appian Corporation APPN $135 -$15 $0   $1,170 $20 $35 $1,155 -11%   8.54x
Blackbaud BLKB $745 $126 $160   $4,330 $356 $14 $4,672 17%   6.27x
Callidus Software CALD $216 -$8 $29   $1,580 $0 $183 $1,397 -4%   6.45x
Channel Advisors ECOM $115 -$7 $9   $275 $1 $63 $213 -6%   1.85x
Cloudera CLDR $284 -$333 -$88   $2,270 $0 $222 $2,048 -117%   7.21x
Ebix EBIX $306 $111 $89   $1,820 $309 $123 $2,006 36%   6.55x
Ellie Mae ELLI $394 $82 $114   $2,970 $0 $334 $2,636 21%   6.70x
Everbridge Inc EVBG $83 -$10 $10   $659 $0 $40 $619 -13%   7.50x
FireEye FEYE $720 -$219 -$9   $2,610 $751 $875 $2,486 -30%   3.45x
HealthStream HSTM $238 $24 $47   $753 $0 $116 $637 10%   2.67x
J2 Global JCOM $928 $376 $269   $4,080 $828 $187 $4,721 40%   5.08x
Kinaxis KXSCF $121 $20 $33   $1,500 $0 $142 $1,358 17%   11.18x
Medidata Solutions MDSO $509 $77 $106   $4,470 $271 $367 $4,374 15%   8.60x
Mimecast MIME $187 $2 $33   $1,580 $2 $112 $1,471 1%   7.88x
Mulesoft MULE $235 -$54 $1   $2,820 $0 $256 $2,564 -23%   10.92x
NantHealth NH $103 -$147 -$65   $520 $192 $125 $587 -142%   5.68x
Paycom Software PAYC $359 $79 $109   $4,170 $32 $93 $4,109 22%   11.46x
Paylocity Holding PCTY $284 $17 $47   $2,340 $0 $101 $2,239 6%   7.89x
Q2 Holdings QTWO $161 -$19 -$7   $1,600 $0 $82 $1,518 -12%   9.43x
Tabula Rasa Healthcare TRHC $102 $4 $4   $269 $2 $3 $267 4%   2.63x
Talend TLND $116 -$26 $4   $1,090 $0 $95 $995 -22%   8.57x
The Trade Desk TTD $226 $59 $35   $2,260 $26 $107 $2,179 26%   9.65x
Upland Software UPLD $78 $9 $9   $500 $57 $19 $538 11%   6.90x
Workiva WK $186 -$34 $11   $807 $21 $65 $763 -18%   4.10x
Yext YEXT $134 -$45 -$24   $1,130 $0 $134 $996 -33%   7.42x
Zix ZIXI $62 $12 $15   $290 $0 $23 $267 20%   4.32x
                         
                         
Average   $471 -$10 $84   $2,655 $126 $274 $2,508 -9%   6.81x
Median   $237 -$12 $16   $1,790 $1 $124 $1,644 -6%   6.80x

 

With revenue multiples so high, it’s a good time to consider selling your business or raising capital.        

 

 

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