For SaaS companies, profitability has received a renewed focus, but we would caution against sacrificing too much growth to achieve it. The data shows a SaaS company will drive far more value if they grow high quality ARR (100%+ NDR). The data below proves that view out.
Of the 78 publicly traded SaaS companies we follow, the 30 most profitable have average and median revenue multiples of 6.9x and 3.5x respectively. Alternatively, the 30 fastest growing have average and median revenue multiples of 9.9x and 6.7x. Those gaps in valuation are massive. The data is clear on this: if you’re a SaaS company with high quality ARR (100%+ NDR), do not sacrifice cash efficient growth for profitability.
Below we show the 30 most profitable companies.
Below we show the 30 fastest growing companies.
Thank you for your readership. Visit blossomstreetventures.com for more SaaS data and blogs. Email the author directly at sammy@blossomstreetventures.com or connect on LinkedIn
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