Earlier this year, we partnered with Blossom Street Ventures to share their quarterly SaaS Benchmarks Report. They’ve been following every publicly traded SaaS company in the U.S. and tracking metrics in this report since October 2017.
Now, with updated metrics for Q4 of 2023, we're excited to share the latest data and insights with you.
Sammy Abdullah, Managing Partner and Co-Founder at Blossom Street, posted a wonderfully detailed analysis of Q4 SaaS revenue multiples on their blog recently, which you should definitely check out if you want to go deeper into the data.
We’ve compiled a short summary of his analysis and takeaways below.
Median SaaS Revenue Multiples Are Up
Median SaaS revenue multiples in Q4 of 2023 increased 11% over the previous year for the 110 publicly traded SaaS companies being tracked. Last quarter, the median multiple hit 6.3X, also up from 5.6X in Q3 of 2023.6.3X
Median Revenue Multiple | Average Revenue Multiple | |
Q4 2023 | 6.3X | 7.5X |
Q3 2023 | 5.6X | 6.4X |
Q4 2022 | 4.9X | 5.9X |
Q3 2022 | 5.6X | 7.1X |
Though far from their 2020 highs, revenue multiples have crept back up to a level that is more in line with long-term historical trends, which we generally consider to be healthy. It’s a trend that looks like it’s going in the right direction after bottoming out in Q4 of 2022.
Take a look at the following chart that illustrates the median valuation multiple gathered since Q4 2014. Over this period, median SaaS multiples fluctuated between 4.6X and 14.1X, which averages out to 7.9X.
Median Growth Is Up Year Over Year
With a median YoY growth of 18% in Q4 of 2023, we can see that investors still have an appetite for technology companies. As one might expect, revenue multiples for SaaS companies growing above the 18% median are stronger: 8.98X on median and 10.11X on average.
Median EBITDA Margin Is Negative but Cash Flow Looks Promising
Median EBITDA margin was -4%, but more than half (56%) of the companies with negative EBITDA had positive cash flow. Only 27 of the 62 companies with negative EBITDA margin also had negative cash flow. Up-front collections on annual contracts and negligible debt have contributed to the good news on operating cash flow.
Fewer SaaS Companies Are Trading at a Premium
The gap between the average and median SaaS multiple was only 1.2X in Q4 — this shows that there are still some premium SaaS companies getting slightly higher valuations. This gap, however, is much smaller compared to 2020 and 2021 when it averaged about 5.8X. You can see the trend in the multiple premium over time here:
While the number of SaaS companies trading at a premium has shrunk, the number of companies that achieved a multiple greater than 10X in Q4 of 2023 is on par with 2018 and 2019 figures. Only 4 SaaS companies traded higher than 20X in Q4.
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