Tech multiples at all time highs

Tech multiples at all time highs

Below are revenue multiples for publicly traded consumer tech companies we follow (B2C). Industries and therefore multiples vary widely. Commentary is below. Side note: if you’re looking for data on SaaS multiples, it’s here.



Social media popped to 19.9x. The highs in 2017 were ~14x, but a more normalized multiple historically has been around ~10x. Snapchat is at 34x, near it’s IPO multiple of 40x in Q4 2016. They lost nearly $833mm in EBITDA on $2.1bln of revenue, but continue to grow at 40% YOY despite the FB threat. Pinterest lost $263mm in EBITDA on revenue of $1.3bln but still trades at 28.2x. The most acquirable of the group, Twitter, trades at 11.6x and has +$294mm of EBITDA but flat revenue growth.

Traditional marketplace multiples vary widely. Prior to Q3 2018, the sector only had 2 companies and now has 9. The median multiple is now 8.6x, but Etsy is at 16.0x, Fiverr is at 40.7x, and new entrant AirBnB is at 23.6x. Etsy grows at 84% YOY with $1.3bln of revenue, and a solid 24% EBITDA margin. The multiples for these top performers are very high, whereas flatter growth cash generators like Shutterttock and eBay trade at <4x.

Discounts and couponing are dead. Remember when Groupon was a high flier? Well today it has stopped growing (-30% YOY growth) and trades at 0.5x revenue. This was one of the fastest growing companies ever that came up during the recession of ’08, and now no one cares. There is a chance it comes back in this environment, but generally your business should not revolve around discounting and couponing.

Other Outliers. DraftKings trades at 40.4x its $423mm of revenue. DoorDash trades at 22.3x it’s $2.2bln in revenue. Both companies do not generate EBITDA.

Grubhub. Grubhub popped to 4.4x revenue in Q4 2019, but that’s because they announced they’re for sale. We’ll see what happens there. Meal delivery has become increasingly competitive as peers like Uber and DoorDash continue to overspend on customer acquisition as if the market can only support one winner. Uber did just buy Postmates July 6th for $2.65bln in stock.

Rideshare is bifurcating. Lyft is at 5.0x revenue while Uber somehow is holding strong at 7.3x revenue. We suspect the revenue multiple for both would be higher, but both businesses light cash on fire; Uber’s EBITDA is -$3.7bln while Lyft is at -$1.5bln. It’s hard to envision either company generating cash any time in the near future given their current market share and very high levels of burn.

Subscription. Subscription trades at 8.3x revenue. Netflix revenue multiple continues to be the outperformer at 10.4x. no longer trades as it got acquired by IAC in December 2019 for $500mm (2.5x revenue). Match is at 8.7x revenue while Angie’s List (now part of HomeAdvisor) is at 4.5x.

Gaming. The median revenue multiple of 6.5x is strong. SciPlay, the latest IPO in the space, is an underperformer at 0.2x.

Ecommerce is varied. The sector is the least attractive to investors, with a median revenue multiple of 1.8x. There is a big difference between what we would call premium ecommerce like, Carvana, and Amazon (4.6x, 8.7x, and 4.8x), versus weak ecommerce like Blue Apron (0.3x revenue). The latter are far less discretionary than the former. Chewy which is a new, massive non-discretionary ecom player ($6.4bln in revenue) trades at 5.7x. We would note it has excellent customer retention metrics though and will likely be a premium ecom player for years to come, if not a nice acquisition target.

Hardware is consistent. ­Hardware is steady at 3.9x, and has traded in a tight range historically of 2.0x to 3.8x. Roku is the standout of the group (27x) as it’s growing at a strong 55% YOY. Peloton trades at 18.2x on $2.3bln of revenue. Note that even though Apple doesn’t grow, it trades at 8.3x revenue, in part because of the strong cash flow generation (28% margin) and world class brand.

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