Clouded Judgement: Fed Rate Cuts and SaaS Valuation Implications
The Federal Reserve cut rates by 50 basis points, signaling a shift from inflation-fighting to balanced monetary policy, with expectations for approximately 1% in aggregate cuts through 2025. The article analyzes how this macroeconomic shift impacts SaaS company valuations, which are predominantly traded on revenue multiples, and provides comprehensive benchmarking data on median SaaS operating metrics and unit economics.
Metrics in this report
3.72percent
current
As of September 19, 2024
41months
median
Public SaaS companies
5.4multiple
median
All public SaaS companies in dataset
15.6multiple
median
Top 5 highest-valued SaaS companies by multiple
9.6multiple
median
High-growth SaaS companies (>27% projected NTM growth)
8.6multiple
median
Mid-growth SaaS companies (15%-27% NTM growth)
4.0multiple
median
Low-growth SaaS companies (<15% NTM growth)
4.75-5.00percent
current
Post-50bps rate cut, September 2024
16percent
median
Public SaaS companies with positive FCF
17percent
median
Public SaaS companies as % of revenue
75percent
median
Public SaaS companies
16percent
median
Public SaaS companies
12percent
median
Public SaaS companies
110percent
median
Public SaaS companies
-9percent
median
Public SaaS companies
24percent
median
Public SaaS companies as % of revenue
41percent
median
Public SaaS companies as % of revenue
4.2percent
current
Current labor market