SaaS

SEG Snapshot: 2Q20 SaaS Public Market Update

According to Software Equity Group’s 2020 Q2 report – the SaaS Index has made a stellar rebound. Capping off the quarter at an all-time high in terms of YTD stock price performance. Public SaaS companies outpaced other indices, including Nasdaq, Dow Jones, and S&P 500.

Report Highlights include: 

  • On a quarterly basis, the median revenue multiple was in line with prior quarters, posting 8.8x EV/Revenue in 2Q20. The solid multiple points to the health and resiliency of public SaaS companies during the COVID pandemic and associated macro uncertainty.
  • Evaluating the median EV/Revenue multiple on a monthly basis further demonstrates the impressive rebound by public SaaS companies, surpassing pre-COVID levels and posting a striking 10.4x EV/Revenue multiple in June.
  • The size of public SaaS companies continues to grow, as the SEG SaaS Index posted a median TTM revenue of $545.8M. Revenue growth slowed YOY, posting a median 25.4% compared to 2Q19’s 27.4% revenue growth.
  • In this period of market uncertainty, there was a flight to safer, higher quality assets as evidenced in the higher YOY EV/Revenue multiples for companies greater than 20% on a Rule of 40% basis, and profitable businesses with EBITDA margins over 20%.
  • Communications and Collaboration companies continue to reap the benefits of social distancing measures. The group posted a median 18.9x EV/Revenue and includes SaaS high-fliers Zoom (55.3x), RingCentral (23.8x), Slack (23.7x), and Docusign (21.1x). 

 

 

To review SEG’s full report, click here. 

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