SaaS

SEG Snapshot: 1Q20 SaaS Public Market Update

Public stock markets took a major turn from the decade-long bull market due to uncertainty from COVID-19. Major indices such as Nasdaq, S&P 500, and Dow Jones took the plunge during March, and we continue to measure the impact on public SaaS companies.

Here are a few of the report’s highlights: 

  • The COVID-19 downturn is expected to impact valuations in the SaaS public market. 
  • On a quarterly basis, the median revenue multiple in 1Q20 remained in line with prior quarters, reaching 8.4x EV/Revenue.
  • An analysis of revenue multiples on a monthly basis shows the impact of the COVID-19 downturn. The median revenue multiple in March dipped to 6.1x EV/Revenue, and then increased to 6.5x EV/Revenue in April. We expect to see the impact on valuation to be reflected in the second quarter.
  • Communications & Collaboration SaaS companies continue to outpace other product categories in terms of valuation and is expected to continue this trend due to increased demand with mandatory stay at home orders. 
  • Select companies in the top 25% of the Index (by EV/Revenue) include Zoom, RingCentral, and Slack.
  • SaaS companies continue to grow at a healthy rate alongside a modest increase in revenue, as the Index surpassed $500M TTM revenue in 1Q20. In addition, EBITDA margins improved significantly, reaching a median -0.6% in 1Q20, compared to last quarter’s -2.3% margin.

Click here to download the SEG Snapshot – 1Q20 SaaS Public Market Update

 

SEG’s 1Q20 SaaS Public Market Update is a snapshot of how public companies are performing in our SEG SaaS Index. The Index is comprised of 100 publicly traded companies that primarily offer solutions via the cloud and/or through a subscription or transaction-based model.

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