For SaaS companies, profitability has received a renewed focus, but wewould caution against sacrificing too much growth to achieve it. The data shows a SaaS company will drive farmore value if they grow high quality ARR (100%+ NDR) in a cash efficient manner(generate $0.70+ of net new ARR for every $1 of operating loss). The data below proves that view out.
Of the 81 publicly traded SaaS companies we follow, the 30 mostprofitable but slowest growing companies have average and median revenuemultiples of 9.4x and 5.3x respectively. Alternatively, the 30 fastest growing but least profitable companieshave average and median revenue multiples of 14.3x and 10.2x. Those gaps in valuation are massive. The data is clear on this: if you’re a SaaS company with high qualityARR (100%+ NDR), do not sacrifice cash efficient growth for profitability.
Below we show the 30 most profitable but slowest growing companies. To put the list together, we sorted byslowest growth first and most profitable second.
Below we show the 30 fastest growing but least profitable companies. To put the list together, we sorted by leastprofitable first and fastest growing second.
Thank you for your readership. Visitblossomstreetventures.com for more SaaS data and blogs. Email the author directly at sammy@blossomstreetventures.com orconnect on LinkedIn
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