cloudedjudgement.substack.com · 2021-09-24 · 1714d

Clouded Judgement: SBC Benchmarking and SaaS Valuation Multiples Analysis

This article analyzes stock-based compensation (SBC) as a hidden cost in SaaS financials, comparing SBC spend across public cloud software companies and correlating it with valuation multiples. The analysis reveals that high-growth SaaS companies command premium valuations (35.4x median for >30% growth) while operating at significant losses, and provides detailed benchmarking data on gross margins, FCF margins, NRR, and CAC payback across the public SaaS cohort.

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Metrics in this report

CAC Payback Period

25months

median

Public SaaS companies on gross profit basis

CAC Payback Period

25months

median

Public SaaS companies (gross profit adjusted)

EV / NTM Revenue Multiple

15.8x

median

Overall public SaaS market

EV / NTM Revenue Multiple

57.1x

median

Top 5 highest-valued SaaS companies

EV / NTM Revenue Multiple

35.4x

median

High-growth SaaS (>30% NTM growth)

EV / NTM Revenue Multiple

14.5x

median

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

EV / NTM Revenue Multiple

5.7x

median

Low-growth SaaS (<15% NTM growth)

FCF Margin

6%percent

median

Public SaaS companies

FCF Margin

6percent

median

Public SaaS companies

G&A % Revenue

19%percent

median

Public SaaS companies

G&A as Percent of Revenue

19percent

median

Public SaaS companies

Gross Margin

74%percent

median

Public SaaS companies

Gross Margin

74percent

median

Public SaaS companies

LTM Revenue Growth

31percent

median

Public SaaS companies

NTM Revenue Growth

23percent

median

Public SaaS companies

NTM Revenue Growth Rate

23%percent

median

Public SaaS companies

Net Revenue Retention

120%percent

median

Public SaaS companies

Net Revenue Retention

120percent

median

Public SaaS companies

Operating Margin

-16%percent

median

Public SaaS companies

Operating Margin

-16percent

median

Public SaaS companies

R&D % Revenue

26%percent

median

Public SaaS companies

R&D as Percent of Revenue

26percent

median

Public SaaS companies

S&M % Revenue

43%percent

median

Public SaaS companies

S&M as Percent of Revenue

43percent

median

Public SaaS companies

SBC % Revenue

114%percent

top-quartile

Palantir; recent IPO cloud software company

SaaS Valuation Multiple (EV/NTM Revenue)

15.8x

median

All public SaaS companies as of July 2021

SaaS Valuation Multiple (EV/NTM Revenue)

35.4x

median

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

SaaS Valuation Multiple (EV/NTM Revenue)

14.5x

median

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

SaaS Valuation Multiple (EV/NTM Revenue)

5.7x

median

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

Stock-Based Compensation as Percent of Revenue

114percent

maximum

Palantir (highest SBC burden)

Stock-Based Compensation as Percent of Revenue

68percent

Snowflake

Stock-Based Compensation as Percent of Revenue

7percent

minimum

Adobe and Shopify (lowest SBC burden)