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SEG’s Annual SaaS Report: 2021

By February 4, 2022Article, Reports, Trend Quarterly

SEG’s Annual Report labels 2021 as an outstanding year for the software industry. M&A activity and valuations broke records once again. SaaS deal volume grew an astonishing 40% in 2021, reaching nearly 1,800 transactions for the year.

Here is a snapshot of how public companies are performing in our SEG SaaS Index.

6 Highlights from the Report:

  1. The median EV/Revenue multiple for the SEG SaaS Index grew an outstanding 20% YOY, reaching a record 14.7x
    in 2021.
  2. The SEG SaaS Index surpassed $600M in median TTM revenue for the first time as revenue growth spiked to
    27.2% in 4Q21.
  3. In 4Q21, SaaS highflyers saw a significant correction in multiples as investors shifted away from riskier highgrowth companies that boasted some of the highest multiples in the Index.
  4. While the SaaS Index remains largely unprofitable (-3.1% median EBITDA margin), median free cash flow from
    operations improved substantially over the last two years (9.7% in 2021 vs. 4.5% in 2019).
  5. Snowflake (99.7x), (92.3x), and Cloudflare (90.1x) lead the SEG SaaS Index in terms of EV/Revenue
  6. Dev Ops & IT Management (17.4x) and Communications & Collaboration (16.5x) continued to lead other product
    categories in median EV/Revenue multiples in 4Q21.

Read the full Public Market Update from Software Equity Group, here.

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