Clouded Judgement: IT Budget Sentiment Stabilizing Amid SaaS Growth Deceleration

The article analyzes the state of SaaS through multiple lenses: Q4 2022 net new ARR data shows median software companies added 20% less ARR year-over-year despite headcount growth, indicating a significant slowdown. Morgan Stanley CIO survey data suggests IT budget sentiment may be stabilizing, with an up-to-down budget revision ratio improving to 0.4x from 0.3x, though expectations remain below historical 4% annual growth norms. Current SaaS valuations compress with median EV/NTM revenue multiples at 6.0x and growth-adjusted multiples revealing mixed relative valuations across the cohort.