cloudedjudgement.substack.com · 2021-04-16 · 1875d

Clouded Judgement: SaaS Valuation Multiples & Treasury Yield Correlation

This article analyzes the strong negative correlation (-0.93) between SaaS valuation multiples and 10-year Treasury yields over a two-month period, showing median NTM multiples compressed from 19.7x to 15.2x as yields rose from 1.15% to 1.70%. The analysis provides benchmarking data on top cloud companies' profitability profiles, growth rates, and operating metrics, with median SaaS cohort metrics including 74% gross margin, 117% net retention, and 24% NTM growth.

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Metrics in this report

10-Year Treasury Yield

1.15percent

null

February 5, 2021 (peak correlation point for SaaS multiples)

10-Year Treasury Yield

1.70percent

null

March 26, 2021 (maximum yield during period)

10-Year Treasury Yield to Cloud Multiple Correlation

-0.93correlation coefficient

median

2+ month period from February to April 2021

High-Growth SaaS Revenue Multiple

27.1x NTM Revenue

median

SaaS companies with >30% projected NTM growth

High-Growth SaaS Valuation Multiple

27.1x

median

Companies with >30% projected NTM growth

Low-Growth SaaS Revenue Multiple

6.7x NTM Revenue

median

SaaS companies with <15% projected NTM growth

Low-Growth SaaS Valuation Multiple

6.7x

median

Companies with <15% projected NTM growth

Median SaaS CAC Payback Period

20months

median

Public SaaS companies (gross margin adjusted)

Median SaaS FCF Margin

9percent

median

Public SaaS companies in cohort

Median SaaS G&A Spend

18percent

median

Percentage of revenue

Median SaaS Gross Margin

74percent

median

Public SaaS companies in cohort

Median SaaS NTM Revenue Multiple

16.4x

median

SaaS cohort as of April 2021

Median SaaS Net Revenue Retention

117percent

median

Public SaaS companies in cohort

Median SaaS Operating Margin

-12percent

median

Public SaaS companies in cohort

Median SaaS R&D Spend

25percent

median

Percentage of revenue

Median SaaS S&M Spend

42percent

median

Percentage of revenue

Mid-Growth SaaS Revenue Multiple

16.1x NTM Revenue

median

SaaS companies with 15-30% projected NTM growth

Mid-Growth SaaS Valuation Multiple

16.1x

median

Companies with 15-30% projected NTM growth

SaaS CAC Payback Period

20months

median

Gross-margin adjusted SaaS companies

SaaS FCF Margin

9percent

median

Public SaaS companies

SaaS G&A Expense Ratio

18percent of revenue

median

Public SaaS companies

SaaS Gross Margin

74percent

median

Public SaaS companies

SaaS Net Revenue Retention

117percent

median

Public SaaS companies

SaaS Operating Margin

-12percent

median

Public SaaS companies

SaaS R&D Expense Ratio

25percent of revenue

median

Public SaaS companies

SaaS Revenue Multiple (1-Year Trailing Average)

14.5x NTM Revenue

average

SaaS market January 2020 - January 2021

SaaS Revenue Multiple (Median)

16.4x NTM Revenue

median

Overall SaaS market as of April 2021

SaaS S&M Expense Ratio

42percent of revenue

median

Public SaaS companies

Top 5 SaaS Revenue Multiple

39.8x NTM Revenue

median

Top 5 highest-valued SaaS companies