Multiples for SaaS companies growing above the median of 25% are better: 8.4x on average and 7.9x on median.
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 8.4x.
Premium gets a premium. Premium SaaS businesses trade at premium multiples. In the data set, 30 companies trade at greater than 10x revenue, 13 trade at greater than 15x, and only 5 trade at greater than 20x.
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 $463mm 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 $35mm); only 33 out of the 123 companies have negative cash flow. Note that 76 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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