Median SaaS Valuations Drop 24% in Q1 2022
As Q1 ended, the impact of the recent market downturn in SaaS company valuations could clearly be seen. Median Enterprise Value/Revenue (ttm) multiples dropped 24% in comparison to Q4 2021. Many once high-flying SaaS companies have seen their valuations slashed.
- SaaS Enterprise Value/Revenue Multiples 2014–2022
- High Flying SaaS Companies Have Taken a Major Hit
- NASDAQ is Off 16% YTD, But Rebounding
- SaaS Companies Are Getting Punished for Poor Operating Results
- It Is Important to Put Q1 2022 in Perspective
SaaS Enterprise Value/Revenue Multiples 2014–2022
Enterprise value is a measure of a company’s total value. While the enterprise value formula has many factors, for SaaS companies it is usually expressed as Equity Value (aka market cap) minus cash plus debt. For privately held companies you can estimate enterprise value using a number of techniques. SaaS company valuations are often expressed as multiples of revenue or EBITDA.
As the chart indicates, the valuations of publicly traded SaaS companies have declined to levels seen in 2018 and 2019:
High Flying SaaS Companies Have Taken a Major Hit
If you look at the highest value SaaS companies from 2021, it is clear that they have taken major valuation hits in 2022: