PVC SaaS Index™ | Q3 2020: “You Get What You Pay For”

Aman Verjee
5 min readNov 22, 2020

Practical Summary:

  • Our PVC Index of SaaS companies now trades at over 11x EV / LTM revenues
  • More recent IPOs (post 2016) are at 18x
  • This group of 51 companies ($680B market cap) is growing at a median 34% yoy growth rate
  • This may be the first time ever that an entire sector in the public market has seen this kind of sustained growth

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 Service (“SaaS”) has been around longer than the cool new “cloud.” It shares some aspects of cloud computing, but its focus tends to be clearer: SaaS is simply the delivery of software applications over the Internet from a server that’s hosted by the SaaS provider somewhere far away.

The first big SaaS IPO was Salesforce (NASDAQ: CRM) in 2004, and now we have 103 pure-play SaaS/cloud companies in our proprietary PVC SaaS Index™, which includes companies that:

1. Are now trading on either the NASDAQ or the NYSE; and

2. Derive a huge majority of recognized revenues from long-term contractual commitments (12 months or greater), and which recognize those revenues periodically over the life of these contracts.

Q3 Valuation Update

The chart below shows the historical EV / LTM (“enterprise value” to “last twelve months” of revenue) going back to 2015. Since early 2015, the median EV / LTM for this group has generally been between 5x and 8x.

At the end of Q3, the median value in the index popped up to over 11x for the first time, while the mean leaped to over 16x, also an all-time high.

Chart 1: Historical SaaS Valuations

Source: CapitalIQ; PVC analysis

If we look more carefully at just those SaaS companies that went public in 2016 or later, these 51…

Aman Verjee

Former C-suite at PayPal, Sonos, eBay. Now general partner & founder at Practical VC, a secondary venture capital fund.