      cloudedjudgement.substack.com · 2021-03-19
      · 1903d
    

Clouded Judgement

This article analyzes SaaS valuation multiples and their correlation with rising interest rates, finding a -93% correlation between 10-year Treasury yields and cloud software multiples from February-March 2021. The author presents quarterly earnings data, valuation comparables across top SaaS companies, and operating metrics benchmarks, concluding that a significant sector rotation occurred driven by macro rate movements rather than fundamental metrics alone.

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Metrics in this report

10-Year Treasury Yield

8.8percent

As of March 12, 2021

CAC Payback Period

21months

median

Public SaaS companies

EV/NTM Revenue Multiple

14.0multiple

median

Public SaaS cohort, March 2021

EV/NTM Revenue Multiple

28.4multiple

median

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

EV/NTM Revenue Multiple

13.8multiple

median

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

EV/NTM Revenue Multiple

6.4multiple

median

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

EV/NTM Revenue Multiple

35.8multiple

median

Top 5 SaaS companies by valuation

Free Cash Flow Margin

9percent

median

Public SaaS companies

G&A Spend

18percent of revenue

median

Public SaaS companies

Gross Margin

75percent

median

Public SaaS companies

NTM Revenue Growth Rate

24percent

median

Public SaaS companies

Net Revenue Retention

116percent

median

Public SaaS companies

Operating Margin

-13percent

median

Public SaaS companies

R&D Spend

25percent of revenue

median

Public SaaS companies

Sales & Marketing Spend

44percent of revenue

median

Public SaaS companies