Software Equity Group Q1 2022 SaaS Public Market Update
Valuation metrics off dramatically, but operating metrics remain strong
The Software Equity Group (SEG) regularly publishes quantitative research on the software and SaaS market M&A activity. The SEG SaaS Index contains dozens of publicly traded SaaS companies. They recently published their SEG Snapshot: 1Q22 SaaS Public Market Update. It provides a ton of data on SaaS valuations and financial operating metrics. The impact of the market downturn can be clearly seen across all categories of SaaS.
I have extracted a few key data points including:
- SEG SaaS Index: Q1 2021 to Q1 2022
- EV/Revenue Multiple Distribution
- Monthly EV/Revenue Declines
- Revenue Growth Remained Strong, In Spite of Valuation Declines
- Median Operating Metrics Remain Strong
- SaaS Product Category Performance
- SEG SaaS Index: Top 25%
- SEG SaaS Index: Bottom 25%
SEG SaaS Index: Q1 2021 to Q1 2022
SaaS valuations peaked in Q2 2021. Median EV/Revenue (ttm) slid from 13.8x in Q4 2021 to 9.8x in Q1 2022.
EV/Revenue Multiple Distribution
The percentage of the SEG SaaS Index trading above 15x declined dramatically.
Monthly EV/Revenue Declines
Median E/Revenue multiples began to decline materially after Thanksgiving 2021. That ttrend continued each month in 2022.