SaaS

SEG Snapshot: 3Q20 SaaS Public Market Update

According to Software Equity Group’s 2020 Q3 report - the SaaS Index reached a record 11.2x for in this third quarter. Investors have clearly identified SaaS as a preferred asset class in 2020, as the median stock price performance of the SEG SaaS Index (+25.9% YTD) has also led the major indices.

 

Highlights:

  • Public SaaS companies lead major indices in terms of YTD stock price performance, reaching 25.9% by the end of 3Q20.
  • The SEG SaaS Index led an impressive rebound in valuation, surpassing previous records and sustaining a new high in 3Q20. The quarter’s median 11.2x EV/Revenue multiple was 31.7% above the 3-year Index median of 8.5x, and 13% greater than 3Q19’s previous record of 9.9x.
  • Investors continue to favor high quality SaaS companies in times of uncertainty, as companies with high gross profit margins and revenue growth posted the highest valuations. 
  • Development Operations & IT Management (20.7x) and Communications & Collaboration (19.9x) posted the highest valuation multiples out of other cohorts due to increased demand from COVID-19 work from home mandates.

 

YTD Stock Market Performance

YTD, the SEG SaaS Index is up 25.9% and leads all major indices. Clearly, investors have identified SaaS as a preferred asset class in 2020. 

 

SEG SaaS Index: Public Market Multiples – Monthly

Public SaaS companies led an impressive rebound and have sustained record median EV/Revenue multiples from June through September


To review SEG’s full 3Q20 report, click here. 

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