The trend is still on. The chart in the picture 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 7.7x.
Premium gets a premium. Premium SaaS businesses trade at premium multiples. In the data set, 56 companies trade at greater than 10x revenue, 45 trade at greater than 15x, and 35 trade at greater than 20x.
SaaS businesses are healthy. There is almost no debt on these businesses (except McAfee) as banks don’t like ‘asset-lite’ businesses like software. Additionally, these companies have $424mm of cash on the balance sheet on median, plenty relative to annual burn (recall EBITDA is -$2mm). The number of years of cash on the balance sheet is less important given that these businesses are generally cash flow positive (median of $61mm; only 20 out of the 93 companies have negative cash flow. Note that 46 out of the 93 have negative EBITDA, but again that’s acceptable so long as the growth is present and cash flow overall is positive.