SaaS Multiples Collapsing Fast

At the end of every quarter, we publish SaaS multiples of publicly traded SaaS companies. It’s very important data since public market valuations do drive those in private markets. We’ve never published the data during a quarter, but the correction in SaaS multiples has been especially rapid. Below are the latest SaaS multiples as of this week.

As you can see, the average revenue multiple is down sharply to 13.5x whereas in Q4 it was 17.9x. The median is also down to 9.2x from 12.2x last quarter. While the impact on private markets may not be immediate, should this trend hold, private markets will follow suit.

The data shows the number of companies trading at premium multiples (10x+, 15x+, and 20x+) is also down materially. For instance, last quarter there were 37 companies trading above 20x. Now there are 23.

Finally, it is notable that there hasn’t been a SaaS IPO since Samsara on December 15th. There were 2 IPO’s total in December, 6 in November, 4 in October (including Gitlab), and 2021 overall was a fantastic year for tech IPOs. The IPO market has now seized up because pricing expectations between new investors and tech companies are not aligning.

The correction has been especially fast, and most investors would tell you we have not found the new baseline yet.

Visit us at blossomstreetventures.com and email me directly at sammy@blossomstreetventures.com. All founders and funds welcome! We invest in companies with run rate revenue of $2mm to $30mm, with year over year growth of 20% to 50%+ depending on revenue. We lead or follow in growth rounds and special situations like inside rounds, small rounds, rushed rounds, corralling investors with our term sheet, bridges, inbetweeners, cap table clean up, and extensions. We can commit in 3 weeks and our check is $1mm to $3mm. Also visit https://blossomstreetventures.com/metrics/ for always up-to-date SaaS metrics.