cloudedjudgement.substack.com · 2023-05-05 · 1126d

Clouded Judgement: Consumption Software Slowdown & Q1 2023 Reacceleration Signals

The article analyzes Q1 2023 SaaS earnings, focusing on consumption software slowdown driven by customer optimization headwinds rather than acquisition weakness. Key findings show net new ARR declining sharply across vendors like Datadog and Confluent, with management cautiously optimistic about reacceleration in H2 2023, while 2023 guidance remains largely de-risked but 2024 estimates carry execution risk if reacceleration timing slips.

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Metrics in this report

CAC Payback Period

37months

median

Public SaaS companies (gross margin adjusted)

Cloudflare Sales Cycle Elongation (Expansion)

49percent

Q1 2023; represents increase from historical baseline

Cloudflare Sales Cycle Elongation (New Customer)

27percent

Q1 2023; represents increase from historical baseline

Datadog Quarterly YoY Growth

33percent

Q1 2023; down from 87% in Q3 2019

EV / NTM Revenue Multiple (High Growth >30%)

6.8x

median

High-growth SaaS companies

EV / NTM Revenue Multiple (Low Growth <15%)

3.0x

median

Low-growth SaaS companies

EV / NTM Revenue Multiple (Mid Growth 15-30%)

5.6x

median

Mid-growth SaaS companies

EV / NTM Revenue Multiple (Overall)

5.0x

median

All public SaaS companies

EV / NTM Revenue Multiple (Top 5 Companies)

10.7x

median

Top 5 SaaS companies by market cap

Free Cash Flow Margin

3percent

median

Public SaaS companies (NTM)

General & Administrative Spend

18percent of revenue

median

Public SaaS companies (NTM)

Gross Margin

75percent

median

Public SaaS companies (NTM)

LTM Growth Rate

25percent

median

Public SaaS companies

NTM Growth Rate

16percent

median

Public SaaS companies

Net Revenue Retention

116percent

median

Public SaaS companies (LTM)

Operating Margin

-21percent

median

Public SaaS companies (NTM)

Research & Development Spend

28percent of revenue

median

Public SaaS companies (NTM)

Sales & Marketing Spend

47percent of revenue

median

Public SaaS companies (NTM)