The coronavirus pandemic has been the most disruptive event to the…
EV / LTM multiples for SaaS companies
This post is an update in a quarterly series of posts that tracks the PVC SaaS Index™, a basket of publicly traded US-listed SaaS companies.
Software as a…
A Practical Summary
A Practical Summary:
Software as a Service (“SaaS”) has been around longer…
· The enterprise value of a SaaS company at IPO can be predicted almost entirely with just two metrics: 1) the annual recurring revenue in the most recent quarter, and 2) the yoy growth rate of that ARR from the year-ago period
· The relationship between revenue growth and the EV / ARR multiple can be plotted cleanly on a line of best fit that explains an IPO’s price to within 2 turns (i.e. if the plot predicts a 10x EV / ARR, the actual price would be within 8–12x)
· In order to go public, you should have…
· 2019 was a banner year for high-growth SAAS companies going public, with 12 companies listing their shares, including Zoom, Slack, DataDog and Crowdstrike
· These companies IPO’ed at an average EV / LTM multiple of 15x, and as of April 9 … even with the recent market rout … the 2019 SAAS IPO Class is trading even higher at 18x
· If you had been able to buy into the latest pre-IPO round of these 12 companies, you would have made a 5x return, with 11 of the 12 companies in the black
2019 was a great year…
Former C-suite at PayPal, Sonos, eBay. Now general partner & founder at Practical VC, a secondary venture capital fund.