Clouded Judgement
Following FOMC commentary signaling potential rate hikes by end of 2022, growth software stocks initially sold off but recovered sharply, suggesting market expectations were priced too conservatively and growth multiples remain resilient to tighter monetary policy. The article analyzes current SaaS valuation multiples, operating metrics across public cloud software companies, and applies the Rule of 40 framework to assess business quality relative to growth expectations.
Metrics in this report
24months
median
Public SaaS companies on gross profit basis
15.9x
median
Public SaaS companies overall
25.5x
median
High-growth SaaS companies
5.4x
median
Low-growth SaaS companies
12.9x
median
Mid-growth SaaS companies
10percent
median
Public SaaS companies
18percent of revenue
median
Public SaaS companies
74percent
median
Public SaaS companies
30percent
median
Public SaaS companies
23percent
median
Public SaaS companies
118percent
median
Public SaaS companies
-13percent
median
Public SaaS companies
25percent of revenue
median
Public SaaS companies
43percent of revenue
median
Public SaaS companies