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.