The median run-rate ARR valuation multiple of the 68 public, B2B SaaS companies was 6.7x at the end of September.
SaaS valuations peaked in August 2021 at 16.9x, then declined over the next 12 months to 7.5x in August 2022, and have stayed in a range of
6.2x to 7.5x in the 12 months since.
The median monthly recurring revenue of the companies is $51.6 million ($619M ARR).
The median growth rate is 18% year-over-year.
The median burn rate is 10% per month.
The median growth + profitability ratio ("Rule of 40") for companies in the index is 11. (The median GP ratio is a median of the individual
calculated ratios for each company. So, this is a slightly different and more accurate figure than just adding the median growth rate and median profitability rate together.)
Despite the historically weak growth rate (more below), only two companies in the index are shrinking y-o-y: Upland Software and Expensify. Interestingly, Expensify has shrunk 10% y-o-y. Is that a function of layoffs in software and other white-collar, remote, "laptop jobs?" Decreased travel
and more remote work requiring less expense reporting? It's an interesting reflection on the macroeconomy.
18% is the lowest the index median growth rate has ever been and marks a continuation of a steady march down from the local maximum of
~30% in Q4 2021.
Median profitability has improved considerably over the last 12 months, from -36% of revenue in June 2022, to -10% today. The data corroborates a steady shift from "growth at all costs" to "profitable growth." The cause and effect is not clear, however, as it looks like growth rates were slowing even during the "growth at all costs" period, so the drive to profitability may have happened without an equity market collapse.