Clouded Judgement: Are Software Valuations Cheap or Expensive?

The article analyzes whether SaaS software companies are currently cheap or expensive by examining multiple valuation frameworks. While revenue multiples appear below historical averages, growth-adjusted revenue multiples are at all-time highs at 0.56x versus a long-term average of 0.2x, suggesting valuations are expensive relative to growth. The analysis reconciles this paradox by examining FCF multiples and business quality improvements, concluding that current valuations warrant nuanced interpretation depending on which metric anchors the assessment.