As expected, SaaS multiples in Q1 couldn’t survive the tariff non-sense. Of the 88 publicly traded SaaS companies we follow, the median multiple was 5.84x revenue while the average was 8.05x. Multiples for SaaS companies growing above the median of 16% are stronger: 8.30x on median and 10.74x on average. These figures are big jumps from Q3 2024. The data is below.
Additional observations are as follows:
The heyday of 2020 has not returned, and probably won’t. 23% of companies are trading at 10x revenue or greater, whereas the peak was 60% in Q4 2020. 4 companies trade above 20x whereas 35 traded above 20x in Q4 2020. Additionally, the gap between the average and median is 2.2x, meaning premium SaaS companies are getting higher valuations, but that gap is tight relative to 2020 and 2021 when it was ~5.8x.
The stats. The median SaaS business had trailing twelve month revenue of $939mm, EBITDA of $28mm, and positive operating cash flow of $179mm thanks to up-front collections on annual contracts. YOY growth is 16% on median. The median EBITDA margin is 4%. Debt is negligible. While 37 of the companies have negative EBITDA, only 4 have negative cash flow.
The trend. The chart below shows median revenue multiples we’ve collected since Q4 2014. The dotted line is a trendline. During the period shown, the median SaaS multiple has ranged from 5.8x (Q2 2024) to 24.0x (Q4 2020).
Premium gets a premium. Premium SaaS businesses trade at premium multiples. In the data set, 20 companies trade at greater than 10x+ revenue, 7 trade greater than 15x, and 4 trade greater than 20x.
Removals. We’ve removed companies that continue to show extreme distress. Their valuations are very low (~1x revenue), they have no growth, no profitability, and they have very low enterprise values. They should not be used to assess multiples for a healthy company going through M&A. More recent removals include LivePerson, Brightcove, Upland, Viant, ON24, ZipRecruiter, Yext, Secureworks, Instructure, and Expensify.
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