cloudedjudgement.substack.com · 2024-04-26 · 769d

Clouded Judgement: Azure AI Services Growth Signals Positive Infrastructure Software Outlook

Microsoft's Azure growth of 31% YoY signals positive momentum for infrastructure software, with Azure ex-AI Services rebounding despite AI Services growth decelerating due to GPU capacity constraints. SaaS valuations have compressed to 10-year lows with median FCF multiples and revenue multiples declining, while operating metrics show median NTM growth of 13% and FCF margins of 11% across public software companies.

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Metrics in this report

Azure AI Services Run Rate

4053million USD quarterly

Microsoft Azure Q1 2024 (estimated)

Azure Growth Rate

31percent YoY

Microsoft Azure Q1 2024

High-Growth SaaS Revenue Multiple

8.6x

median

SaaS companies with NTM growth >27%

Low-Growth SaaS Revenue Multiple

4.2x

median

SaaS companies with NTM growth <15%

Median CAC Payback

39months

median

Public SaaS companies (GM-adjusted)

Median G&A as % of Revenue

16percent

median

Public SaaS companies

Median NTM Growth Rate

13percent

median

Public SaaS companies

Median R&D as % of Revenue

25percent

median

Public SaaS companies

Median S&M as % of Revenue

41percent

median

Public SaaS companies

Median SaaS FCF Margin

11percent

median

Public SaaS companies

Median SaaS Gross Margin

75percent

median

Public SaaS companies

Median SaaS NTM Revenue Multiple

5.8x

median

All public SaaS companies

Median SaaS Net Revenue Retention

110percent

median

Public SaaS companies

Median SaaS Operating Margin

-11percent

median

Public SaaS companies