Drivers of Valuation: DCF Models vs. Revenue Multiples in SaaS

The article contrasts DCF valuation models with revenue multiple approaches for software companies, arguing that while DCF is theoretically superior, both methods require understanding the same underlying drivers of long-term cash generation. The author analyzes year-over-year revenue multiple shifts for public SaaS companies to illustrate how investor expectations about future growth and profitability drive valuation changes, using ZoomInfo and C3 as case studies of multiple compression and expansion.