cloudedjudgement.substack.com · 2023-08-18 · 1021d

Clouded Judgement: Q2 SaaS Earnings Review & Valuation Multiple Analysis

This article analyzes Q2 2023 SaaS earnings trends across a cohort of ~60 public software companies, finding that net new ARR growth improved YoY but remains deeply negative, with high-growth cohorts underperforming mid/low-growth peers. The author examines current valuation multiples in the context of macroeconomic scenarios (soft landing vs. recession vs. sticky inflation), concluding that the market is increasingly pricing in riskier outcomes that could pressure software equity valuations.

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Metrics in this report

10-Year Treasury Yield

4.3percent

As of August 2023, highest since pre-Global Financial Crisis

CAC Payback

47months

median

Public SaaS companies

Free Cash Flow Margin

6percent

median

Public SaaS companies

G&A as % of Revenue

17percent

median

Public SaaS companies

Gross Margin

75percent

median

Public SaaS companies

Net New ARR YoY Growth

-20percent

median

Q2 2023 public SaaS cohort (~60 companies, estimated)

Net Revenue Retention

115percent

median

Public SaaS companies

Operating Margin

-18percent

median

Public SaaS companies

R&D as % of Revenue

27percent

median

Public SaaS companies

SaaS Valuation Multiple (High Growth >30%)

10.0x NTM Revenue

median

High-growth SaaS cohort (NTM growth >30%)

SaaS Valuation Multiple (Low Growth <15%)

3.5x NTM Revenue

median

Low-growth SaaS cohort (NTM growth <15%)

SaaS Valuation Multiple (Mid Growth 15-30%)

8.1x NTM Revenue

median

Mid-growth SaaS cohort (NTM growth 15-30%)

SaaS Valuation Multiple (Overall)

5.7x NTM Revenue

median

Public SaaS companies at scale

SaaS Valuation Multiple (Top 5)

13.2x NTM Revenue

median

Top 5 largest/most valuable public SaaS companies

Sales & Marketing as % of Revenue

44percent

median

Public SaaS companies