cloudedjudgement.substack.com · 2024-11-01 · 580d

Clouded Judgement: AI, CapEx, and SaaS Valuation in the Era of Rising Rates

This article analyzes macro trends affecting cloud software companies, including rising interest rates (10Y jumped from 3.7% to 4.3%), AI adoption metrics from major cloud providers, and significant CapEx increases across Amazon, Google, Microsoft, and Meta. The author provides SaaS valuation multiples, operating metrics benchmarks, and commentary on how AI infrastructure investment is reshaping cloud economics and unit economics for these mega-cap technology platforms.

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Metrics in this report

10-Year Treasury Yield

4.3percent

As of November 1, 2024; increased from 3.7% at start of October

SaaS Customer Acquisition Cost Payback

40months

median

Public SaaS companies at scale

SaaS EV/NTM Revenue Multiple - High Growth (>27%)

10.6x

median

High growth SaaS companies

SaaS EV/NTM Revenue Multiple - Low Growth (<15%)

4.2x

median

Low-growth SaaS companies

SaaS EV/NTM Revenue Multiple - Mid Growth (15-27%)

9.2x

median

Mid-growth SaaS companies

SaaS EV/NTM Revenue Multiple - Overall

5.8x

median

Public SaaS companies at scale

SaaS EV/NTM Revenue Multiple - Top 5 Companies

16.3x

median

Top 5 companies by market cap

SaaS Free Cash Flow Margin

15percent

median

Public SaaS companies at scale

SaaS G&A Expense Ratio

17percent

median

Public SaaS companies at scale

SaaS Gross Margin

75percent

median

Public SaaS companies at scale

SaaS LTM Revenue Growth

16percent

median

Public SaaS companies at scale

SaaS NTM Revenue Growth

12percent

median

Public SaaS companies at scale

SaaS Net Revenue Retention

110percent

median

Public SaaS companies at scale

SaaS Operating Margin

-9percent

median

Public SaaS companies at scale

SaaS R&D Expense Ratio

25percent

median

Public SaaS companies at scale

SaaS Sales & Marketing Expense Ratio

41percent

median

Public SaaS companies at scale