Revenue multiples in B2C

Below are revenue multiples for publicly traded consumer tech companies we follow (B2C). Industries and therefore multiples vary widely. Commentary is below.

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Social media is 9.9x. While the revenue multiple is still strong, it’s down from highs of ~14x in 2017. Snapchat is at 16x after falling from 40x in Q4 2016, and still lost nearly $1bln in EBITDA on $1.5bln of revenue. Pinterest lost more in EBITDA (-$1.2bln) than it generated in revenue ($1bln) but still trades at 11x. Alternatively, the most acquirable of the group, Twitter, trades at 6.9x but had $773mm of EBITDA and respectable 17% YOY revenue growth.

Traditional marketplace multiples vary widely. Prior to Q3 2018, the sector only had 2 companies and now has 7. Last quarter the median multiple was 4.1x, but Etsy is at 8.1x while Fiverr is at 6.9x. Etsy grows the fastest with 39% YOY growth, $748mm of revenue, and a solid 17% EBITDA margin.

Discounts and couponing are dead. Remember when Groupon was a high flier? Well today it has stopped growing (-11% YOY growth) and trades at a very sorry 0.6x revenue. This was one of the fastest growing companies ever in a very spot that came up during the recession, and now no one cares. Stay away from discounting and couponing.

Grubhub. Grubhub popped to 4.2x revenue, but that’s because they recently announced they’re for sale. Meal delivery has become increasingly competitive as peers like Uber and DoorDash continue to overspend on customer acquisition as if the market can only support one winner.

Rideshare is an ok business. Both Uber and Lyft trade at 3x to 4x revenue which is ok. We suspect the revenue multiple would be higher, but both businesses light cash on fire; Uber’s EBITDA is -$8bln while Lyft is at -$2.5bln.

Subscription. Subscription has been humbled since 2018, and now trades at 5.1x revenue. Netflix and Match’s revenue multiple continue to be the outperformers at 8.3x and 13.9x respectively, because their customers are so sticky.

Gaming. The median revenue multiple of 4.6x is strong. SciPlay, the latest IPO in the space, is an underperformer at 3.1x.

Ecommerce is soft. The sector is the least attractive to investors, with a median revenue multiple of 1.5x. There is a big difference between what we would call premium ecommerce like Carvana and Amazon (4.2x and 3.6x), versus weak ecommerce like Blue Apron (0.3x revenue). Chewy which is a new and massive ecomm player ($4.6bln in revenue) trades at 2.6x, likely because it still loses money (-$234m).

Hardware is consistent. ­Hardware is steady at 3.8x, and has traded in a tight range historically of 2.0x to 3.8x. Roku is the standout of the group (15.4x) as it’s growing at a strong 52% YOY. Peloton, the latest entrant, trades at 7.4x on $1bln of revenue, but they lose money, even though prior to the IPO they said they were “profitable”.

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