Q1 tech multiples down

Below are revenue multiples for publicly traded consumer tech companies (B2C). Industries and therefore multiples vary widely. Commentary is below. If you’re looking for data on SaaS multiples, keep scrolling.

Social media is at an all time low. Multiples rose steadily through 2020 peaking at 22.7x on median in Q1 2021. Now we’re at 7.7x. YOY growth in the space is fantastic (45% on median), with Snap and Pinterest leading the way (50%+ YOY growth). Facebook is still the monster in the space with $117bln of annual revenue and a phenomenal EBITDA margin (46%). The newcomer, Doximity, is trading at 30x, which doesn’t seem sustainable relative to peers.

Travel marketplaces are still strong at 4.5x. Multiples hit 10.6x in Q2 2021 which is remarkable for a business that traditionally trades no greater than ~3x. Booking.com is trading at an especially strong 8.9x.

Traditional marketplace multiples vary widely. Prior to Q3 2018, the sector only had 2 companies and now has 11. The median multiple is now 4.0x, but Etsy, Fiverr and AirBnB have extraordinary multiples. Etsy grows 35% YOY with $2.3bln of revenue, and a solid 23% EBITDA margin. The multiples for these top performers are very high, whereas flatter growth cash generators like Shutterttock and eBay trade at 3x to 5x. AirBnB is profitable!

Labor intensive space. The only reason we even include these companies in our analysis is because investors like Softbank insist on labelling these services businesses as tech co’s. At best, they’re tech enabled which isn’t the same thing at all. Remember when Groupon was a high flier? Well today it’s shrinking (-32% YOY growth) and trades at 0.5x revenue. Cash on the books represents more than half the market cap. This was one of the fastest growing companies ever that came up during the recession of ’08, and now no one cares. Redfin and Opendoor got crusched. OpenDoor, Redfin, and Compass don’t make money, which is a very dangerous place to be for services businesses of their size.

Other Outliers. DraftKings trades at 5.8x, way down from it’s 47x days. DoorDash trades at 8.4x it’s $4.8bln in revenue.

Rideshare multiples coming in. Lyft is at 3.8x revenue while Uber is at 4.5x revenue. We suspect the revenue multiple for both would be higher, but both businesses light cash on fire. Lyft’s EBITDA margin is -29% and Uber’s is -17%. 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, and keep in mind food delivery saved Uber during 2020. Bird is trading at 2.9x even though their business model is broken.

Subscription. B2C subscription is an excellent business model and trades at 5.1x revenue, which frankly is pretty reasonable relative to the rest of the group. Match is at 11.9x revenue, Bumbl is at 5.1x. Bumbl and Match both have wonderful profitability and high margins. Duolingo which is new to the group trades at 12.7x.

Gaming. The median revenue multiple of 5.0x is strong. SciPlay is a mess while Roblox is at a very high 14x but is the only cash burner in the group. In 2021 Roblox got hit with a $200mm lawsuit over music rights (June 2021).

Ecommerce is varied. The sector is the least attractive to investors, with a median revenue multiple of 1.3x. There is a big difference between what we would call premium ecommerce like Carvana, Allbirds, Coursera, Chewy, Warby, LegalZoom, and Amazon, versus weak ecommerce like Blue Apron (0.3x revenue). Chewy has excellent customer retention metrics and will likely be a premium ecom player for years to come, if not a nice acquisition target. Note that the margins in ecommerce are really tight with a median EBITDA margin of 0%. Amazon is at 13%, but $14bln of their $23bln of 2020 operating income (61%) came from AWS, whereas AWS was $45bln of their $386bln of net sales in 2020 (12%).

Hardware is elevated at 3.3x. Roku has fallen quite a ways. Apple’s growth is 38%, very strong for a company with $378bln in annual sales and a 34% margin. They recently had a $3trln market cap.


SaaS comps continue to be historically strong, but fell 24% from last quarter. Of the 123 SaaS companies we follow, the average public SaaS business is trading at 12.9x revenue while the median is 9.3x.

The gap between the average and median is 3.6x, meaning premium SaaS companies are getting outlier valuations, but that gap is lowest since Q1 2020, showing the correction in overvalued names. 47% of companies are trading at 10x revenue or greater. The data is below.

Negative EBITDA, positive cash flow. The median SaaS business had trailing twelve month revenue of $451mm, EBITDA of -$32mm, but positive operating cash flow of $41mm thanks to up-front collections on annual contracts. So long as you’re growing (the median annual growth rate is 25%), investors will overlook negative EBITDA especially if the business is cash flow positive after working capital changes.

The trend. The chart below shows median revenue multiples we’ve collected since Q4 2014. During that period, the median SaaS multiple has ranged from 4.6x to 14.1x with an average of 8.5x.

SaaS margins are still terrible. Investors and founders love saying “SaaS margins are great.” They’re not. They’re horrible. The median EBITDA margin for the companies above was -10%. Fixed costs for SaaS are terribly high and worse yet, those fixed costs are mostly people, meaning the only way to materially cut costs is layoffs.

Premium gets a premium. Premium SaaS businesses trade at premium multiples. In the data set, 58 companies trade at greater than 10x revenue, 35 trade at greater than 15x, and 22 trade at greater than 20x.

Growth is strong. The median of 25% is good given the size of these companies. The average is even better at 27%.

SaaS businesses are healthy. There is almost no debt on these businesses as banks don’t like ‘asset-lite’ businesses like software. Additionally, these companies have $452mm of cash on the balance sheet on median, plenty relative to annual burn (recall EBITDA is -$32mm). The number of years of cash on the balance sheet is less important given that these businesses are generally cash flow positive (median of $41mm); only 35 out of the 123 companies have negative cash flow. Note that 67 out of the 123 have negative EBITDA, but again that’s acceptable so long as the growth is present and cash flow overall is positive.

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