The Compression in SaaS Valuations

SaaS public company valuations compressed 30% from early 2014 to early 2015, with median multiples declining from 9.2x to 6.0x NTM revenue. Multiple outliers trading at extreme premiums (e.g., Xero at 50x) have disappeared, creating a narrower valuation band of 5-10x across the public market. Early-stage private funding remains unaffected, but the author predicts compression may eventually impact late-stage growth rounds and IPO valuations.