cloudedjudgement.substack.com · 2024-01-05 · 881d

Clouded Judgement: SaaS Valuation Multiples and Fed Rate Sensitivity (January 2024)

Jamin Ball analyzes how rising 10-year Treasury yields and Fed rate expectations in early January 2024 impacted SaaS stock valuations, with no companies in his tracked basket positive YTD. The article provides detailed benchmarking of 80 SaaS companies across valuation multiples, operating metrics, and Rule of 40 analysis, emphasizing that near-term rate direction—rather than absolute levels—will drive near-term equity performance.

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Metrics in this report

10-Year Treasury Yield

4.0percent

As of January 4, 2024

10-Year Treasury Yield

4.0%percent

current

As of January 4, 2024

CAC Payback Period

39months

median

SaaS public companies on gross profit basis

CAC Payback Period

39months

median

SaaS basket (80 companies) - gross margin adjusted

Consensus Fed Funds Rate (Year-End 2024)

4.57%percent

consensus estimate

As of January 4, 2024

EV / NTM Revenue Multiple

6.0x

median

Broad portfolio of 80 public SaaS companies

EV / NTM Revenue Multiple

15.3x

median

Top 5 highest-valued SaaS companies by multiple

EV / NTM Revenue Multiple

6.0xmultiple

median

Overall SaaS basket (80 companies)

EV / NTM Revenue Multiple

15.3xmultiple

median

Top 5 highest-valued SaaS companies

EV / NTM Revenue Multiple

14.2xmultiple

median

High-growth SaaS (>30% NTM growth)

EV / NTM Revenue Multiple

8.2xmultiple

median

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

EV / NTM Revenue Multiple

4.0xmultiple

median

Low-growth SaaS (<15% NTM growth)

Free Cash Flow Margin

8percent

median

SaaS public companies

Free Cash Flow Margin

8%percent

median

SaaS basket (80 companies)

G&A Expense

17percent of revenue

median

SaaS public companies

G&A Expense Ratio

17%percent of revenue

median

SaaS basket (80 companies)

Gross Margin

75percent

median

SaaS public companies

Gross Margin

75%percent

median

SaaS basket (80 companies)

High Growth SaaS Multiple

14.2x NTM revenue

median

Companies with >30% projected NTM growth

LTM Revenue Growth Rate

20percent

median

SaaS public companies

LTM Revenue Growth Rate

20%percent

median

SaaS basket (80 companies)

Low-Growth SaaS Multiple

4.0x NTM revenue

median

Companies with <15% projected NTM growth

Mid-Growth SaaS Multiple

8.2x NTM revenue

median

Companies with 15-30% projected NTM growth

NTM Revenue Growth Rate

14percent

median

SaaS public companies

NTM Revenue Growth Rate

14%percent

median

SaaS basket (80 companies)

Net Revenue Retention

112percent

median

SaaS public companies

Net Revenue Retention

112%percent

median

SaaS basket (80 companies)

Operating Margin

-13percent

median

SaaS public companies

Operating Margin

-13%percent

median

SaaS basket (80 companies)

R&D Expense

26percent of revenue

median

SaaS public companies

R&D Expense Ratio

26%percent of revenue

median

SaaS basket (80 companies)

S&M Expense Ratio

43%percent of revenue

median

SaaS basket (80 companies)

Sales & Marketing Expense

43percent of revenue

median

SaaS public companies