cloudedjudgement.substack.com · 2021-10-08 · 1700d

Clouded Judgement

Article analyzes SaaS valuation multiples, growth expectations, and operating metrics across the top 10 cloud software companies as of Q3 2021. Morgan Stanley's CIO survey indicates accelerating software spending into 2022, with companies trading at a median 14.5x NTM revenue multiple but top performers commanding 45.5x-57.2x multiples despite significant operating losses. Operating benchmarks reveal 23% NTM median growth, 74% gross margins, 120% net retention, and 25-month CAC payback periods across the cohort.

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Metrics in this report

CAC Payback Period

25months

median

Public SaaS companies on gross profit basis

EV/NTM Revenue Multiple

14.5x

median

Overall public SaaS software cohort

EV/NTM Revenue Multiple

57.2x

median

Top 5 highest-valued SaaS companies by multiple

EV/NTM Revenue Multiple

32.1x

median

High-growth SaaS companies (>30% NTM growth)

EV/NTM Revenue Multiple

13.6x

median

Mid-growth SaaS companies (15-30% NTM growth)

EV/NTM Revenue Multiple

5.4x

median

Low-growth SaaS companies (<15% NTM growth)

Free Cash Flow Margin

6percent

median

Public SaaS companies at scale

G&A Spend as % of Revenue

19percent

median

Public SaaS companies at scale

Gross Margin

74percent

median

Public SaaS companies at scale

LTM Revenue Growth Rate

31percent

median

Public SaaS companies at scale

NTM Revenue Growth Rate

23percent

median

Public SaaS companies at scale

Net Revenue Retention

120percent

median

Public SaaS companies at scale

Operating Margin

-16percent

median

Public SaaS companies at scale

R&D Spend as % of Revenue

26percent

median

Public SaaS companies at scale

S&M Spend as % of Revenue

43percent

median

Public SaaS companies at scale

Software Spending Growth

5.2percent

target

CIO expectations for 2022 calendar year