B2B SaaS: 2024 Valuation Multiples
Software-as-a-Service companies – and B2B SaaS in particular – have benefitted from the increased digitalisation of the workforce brought about by the pandemic, leading to a huge number of companies adopting cloud or subscription based solutions to manage their operations and people.
On the public markets, SaaS stocks are popular among investors, and that popularity has shifted into overdrive as a result of the COVID pandemic. Perhaps most notably, B2B SaaS solutions achieved stellar valuations driven by the mass shift to remote working.
B2B SaaS refers to companies that provide software (app, extensions, add-ons etc.) directly to other businesses as a service, as opposed to B2C, which sell their software directly to individual consumers.
The seemingly relentless growth of the sector, however, came to a halt at the end of 2021—together with public markets and the broader tech sector—with industry giants announcing layoffs and market caps in the SaaS space slashed by 57% on average, which led many to call 2022 the year of the SaaS Crash.
In addition to investors shifting towards less risky options over the past two years, as public markets became unstable and way more bearish compared to its unprecedented run from 2019 to 2021, the B2B sector was impacted by a twofold effect of the cost-of-capital, with spending being cut both internally and by their own customer base.
But in order to understand just how much these conditions influenced B2B SaaS company valuations, we analysed public market data going back five years, which enabled us to compare current valuation multiples with their pre-pandemic counterparts.
Our research is based on the SEG SaaS Index, which lists over 130 publicly traded companies that “primarily offer solutions via the cloud and/or through a subscription or transaction-based model”.
After screening for organisations that record 100% of their revenues from business-to-business sales, 101 companies within the SEG SaaS Index were identified as part of the B2B SaaS cohort.
| Company | Revenue Multiples | EBITDA Multiples | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| 2019 | 2020 | 2021 | 2022 | 2023 | 2019 | 2020 | 2021 | 2022 | 2023 | ||
| Vertically Focused | 2U | 2.9 | 2.7 | 1.5 | 1.2 | – | – | – | – | – | |
| Financial Applications | ACI Worldwide | 3.6 | 3.5 | 3.9 | 2.8 | 2.5 | 16.7 | 14.2 | 14.6 | 9.9 | 10.6 |
| Financial Applications | Alkami | – | – | 15.3 | 5.4 | 5.6 | – | – | – | – | – |
| Sales & Marketing | Amplitude | – | – | 38.1 | 6.6 | 3.9 | – | – | – | – | – |
| Vertically Focused | AppFolio | 12.8 | 15.9 | 12.5 | 7.8 | 10.4 | 101.5 | 126.8 | 221.4 | – | – |
| Dev Ops & IT Management | Appian | 8.9 | 11.4 | 20.4 | 7.3 | 5.7 | – | – | – | – | – |
| Communications & Collaboration | Asana | – | 16.5 | 31.1 | 7.7 | 6.0 | – | – | – | – | – |
| Dev Ops & IT Management | Atlassian | 17.9 | 20.1 | 23.3 | 15.7 | 12.0 | – | – | – | – | – |
| Other SaaS | AvePoint | – | – | 7.5 | 2.9 | 3.5 | – | – | – | – | – |
| Financial Applications | AvidXChange | – | – | 16.9 | 4.0 | 4.5 | – | – | – | – | – |
| Communications & Collaboration | Bandwidth | 5.8 | 8.3 | 6.4 | 1.5 | 1.1 | – | 351.7 | 91.4 | 15.1 | 9.4 |
| Other SaaS | BigCommerce | – | 34.7 | 17.8 | 4.5 | 2.6 | – | – | – | – | – |
| Financial Applications | Bill.com | 16.1 | 25.2 | 26.6 | 12.8 | 8.6 | – | – | – | – | – |
| Vertically Focused | Blackbaud | 5.0 | 3.6 | 4.3 | 3.7 | 4.3 | 38.5 | 25.2 | 37.1 | 47.8 | 40.4 |
| Financial Applications | BlackLine | 8.9 | 12.0 | 15.5 | 8.4 | 6.4 | – | 765.5 | – | 3486.8 | 37.3 |
| Sales & Marketing | Braze | – | – | 27.8 | 8.7 | 8.1 | – | – | – | – | – |
| Other SaaS | Brightcove | 1.9 | 1.6 | 2.4 | 1.2 | 0.8 | – | 87.3 | 35.3 | 154.1 | – |
| Human Capital Management | Ceridian | 9.2 | 13.6 | 15.2 | 8.3 | 7.8 | 61.3 | 201.6 | 674.0 | 188.6 | 56.1 |
| Analytics & Data Management | Clearwater Analytics | – | – | 15.3 | 9.6 | 9.5 | – | – | 120.4 | 283.9 | – |
| Security | Crowdstrike | 27.4 | 23.9 | 34.9 | 17.5 | 11.7 | – | – | – | – | 198.9 |
| Dev Ops & IT Management | Datadog | 27.1 | 39.9 | 31.8 | 18.6 | 13.9 | – | 1017.1 | 1278.0 | 2380.0 | 963.6 |
| Analytics & Data Management | Definitive Healthcare | – | – | 24.8 | 11.3 | 6.2 | – | – | 179.1 | 106.9 | – |
| ERP & Supply Chain | Descartes | 10.1 | 12.4 | 13.5 | 11.5 | 11.3 | 28.9 | 32.5 | 34.2 | 27.8 | 29.1 |
| Dev Ops & IT Management | DigitalOcean Holdings | – | – | 12.6 | 7.7 | 5.6 | – | – | 73.1 | 51.2 | 29.5 |
| Other SaaS | Docebo | – | 16.4 | 17.0 | 6.1 | 6.1 | – | – | – | 82.8 | 153.1 |
| Analytics & Data Management | Domo | 3.9 | 4.5 | 8.6 | 3.4 | 1.7 | – | – | – | – | – |
| Dev Ops & IT Management | DynaTrace | 13.4 | 15.1 | 18.0 | 9.5 | 10.1 | – | 69.6 | 120.3 | 74.2 | 72.0 |
| Vertically Focused | Ebix | 3.6 | 2.2 | 1.6 | 1.3 | 1.4 | 13.4 | 9.1 | 11.3 | 8.8 | 8.4 |
| Communications & Collaboration | Everbridge | 12.0 | 16.0 | 13.8 | 3.9 | 3.0 | – | – | – | 794.6 | 25.7 |
| Sales & Marketing | EverCommerce | – | – | 8.9 | 4.2 | 3.6 | – | – | 96.3 | 32.5 | 22.7 |
| Dev Ops & IT Management | Fastly | 9.0 | 26.2 | 17.2 | 3.9 | 4.6 | – | – | – | – | – |
| Communications & Collaboration | Five9 | 9.4 | 16.5 | 18.9 | 9.0 | 5.9 | 108.0 | 494.5 | – | – | – |
| Vertically Focused | Fortive | 5.5 | 5.4 | 5.0 | 4.4 | 4.4 | 30.4 | 12.3 | 22.2 | 17.7 | 17.0 |
| Sales & Marketing | Freshworks | – | – | 23.9 | 6.2 | 6.7 | – | – | – | – | – |
| Vertically Focused | Guidewire Software | 10.3 | 11.2 | 10.9 | 6.5 | 6.7 | 210.3 | – | – | – | – |
| Vertically Focused | Health Catalyst | 7.6 | 5.8 | 9.3 | 2.1 | 1.8 | – | – | – | – | – |
| Human Capital Management | HealthStream | 2.8 | 2.3 | 3.0 | 2.4 | 2.5 | 16.5 | 12.1 | 17.1 | 12.5 | 12.4 |
| Sales & Marketing | HubSpot | 9.5 | 10.7 | 20.4 | 8.8 | 10.9 | 7630.8 | – | 16374.6 | – | – |
| Other SaaS | Informatica | – | – | 8.0 | 4.6 | 4.1 | – | – | 35.4 | 27.3 | 26.5 |
| Vertically Focused | Intapp | – | – | 6.9 | 3.6 | 6.6 | – | – | – | – | – |
| Dev Ops & IT Management | Jfrog | – | 37.8 | 16.7 | 6.5 | 6.6 | – | – | – | – | – |
| Communications & Collaboration | Kaltura | – | – | 7.0 | 1.1 | 1.2 | – | – | – | – | – |
| ERP & Supply Chain | Kinaxis | 7.2 | 14.7 | 14.0 | 7.9 | 7.7 | 31.2 | 91.1 | 156.9 | 54.9 | 74.9 |
| Sales & Marketing | LivePerson | 6.4 | 7.5 | 8.4 | 2.7 | 1.6 | – | – | – | – | – |
| Financial Applications | MeridianLink | – | – | 8.6 | 6.0 | 5.8 | – | – | 29.3 | 20.6 | 24.7 |
| Vertically Focused | Model N | 4.0 | 5.8 | 5.5 | 3.8 | 4.8 | – | – | – | – | – |
| Communications & Collaboration | Monday.com | – | – | 44.2 | 8.8 | 9.6 | – | – | – | – | – |
| Financial Applications | MSCI | 13.4 | 18.1 | 23.0 | 18.4 | 18.6 | 24.5 | 32.1 | 40.9 | 30.4 | 29.9 |
| Financial Applications | Ncino | – | 33.0 | 21.6 | 9.1 | 6.8 | – | – | – | – | – |
| Dev Ops & IT Management | Nutanix | 4.1 | 3.2 | 4.5 | 3.0 | 3.5 | – | – | – | – | – |
| Security | Okta | 21.3 | 29.4 | 27.2 | 8.0 | 5.3 | – | – | – | – | – |
| Vertically Focused | Olo | – | – | 26.2 | 6.7 | 3.1 | – | – | – | – | – |
| ERP & Supply Chain | Oracle | 5.1 | 4.9 | 6.5 | 5.3 | 7.1 | 11.7 | 10.8 | 20.4 | 14.2 | 18.2 |
| Other SaaS | Pagerduty | 14.4 | 8.2 | 11.3 | 5.8 | 4.9 | – | – | – | – | – |
| Security | Palo Alto Networks | 5.8 | 5.2 | 6.8 | 7.4 | 9.7 | 333.5 | – | 391.7 | 58.7 | 63.3 |
| Human Capital Management | Paycom Software | 16.6 | 20.5 | 21.8 | 13.5 | 10.0 | 45.6 | 72.1 | 71.3 | 38.2 | 27.7 |
| Human Capital Management | Paycor | – | – | 12.9 | 8.4 | 7.0 | – | – | – | 130.7 | 80.0 |
| Human Capital Management | Paylocity Holding | 9.0 | 11.5 | 12.7 | 9.6 | 8.3 | 48.3 | 72.2 | 80.3 | 52.0 | 40.8 |
| Other SaaS | Pegasystems | 6.0 | 7.8 | 8.7 | 3.2 | 3.0 | – | – | – | – | – |
| Vertically Focused | Procore | – | – | 21.3 | 9.3 | 9.2 | – | – | – | – | – |
| Financial Applications | PROS Holdings | 8.9 | 6.3 | 7.3 | 4.6 | 5.1 | – | – | – | – | – |
| Vertically Focused | PTC | 7.0 | 5.7 | 8.4 | 6.9 | 8.6 | 31.0 | 18.4 | 28.5 | 24.0 | 30.1 |
| Financial Applications | Q2 Holdings | 10.6 | 11.9 | 10.9 | 4.8 | 3.4 | – | – | – | – | – |
| Security | Qualys | 9.3 | 9.8 | 9.4 | 9.4 | 8.2 | 26.9 | 26.4 | 30.9 | 27.3 | 24.0 |
| Security | Rapid7 | 7.5 | 7.2 | 10.7 | 6.7 | 4.5 | – | – | – | – | – |
| Communications & Collaboration | RingCentral | 10.9 | 20.3 | 15.8 | 3.3 | 2.1 | 6846.3 | 562.0 | – | – | – |
| Security | Riskified | – | – | 12.2 | 1.4 | 1.2 | – | – | – | – | – |
| Vertically Focused | Roper Technologies | 8.7 | 10.4 | 11.2 | 9.4 | 9.3 | 15.5 | 28.9 | 30.1 | 23.7 | 22.5 |
| Sales & Marketing | Salesforce.com | 7.2 | 7.7 | 8.1 | 5.4 | 5.8 | 47.2 | 49.7 | 55.8 | 30.0 | 21.1 |
| Other SaaS | Samsara | – | – | 30.6 | 8.4 | 14.1 | – | – | – | – | – |
| ERP & Supply Chain | SAP | 5.1 | 5.4 | 5.3 | 3.9 | 4.6 | 19.9 | 15.2 | 15.3 | 16.8 | 21.2 |
| Security | SentinelOne | – | – | 62.1 | 14.2 | 7.0 | – | – | – | – | – |
| Dev Ops & IT Management | ServiceNow | 13.8 | 17.1 | 18.9 | 12.5 | 12.8 | 135.6 | 149.0 | 148.5 | 105.4 | 78.0 |
| Communications & Collaboration | Smartsheet | 15.6 | 14.0 | 15.0 | 5.7 | 5.6 | – | – | – | – | – |
| Analytics & Data Management | Snowflake | – | 118.0 | 62.8 | 24.1 | 18.3 | – | – | – | – | – |
| Dev Ops & IT Management | SolarWinds | 6.9 | 5.5 | 9.1 | 4.0 | 3.6 | 16.0 | 17.4 | 32.9 | – | 12.4 |
| Sales & Marketing | Sprinklr | – | – | 8.2 | 3.8 | 4.2 | – | – | – | – | 104.6 |
| Sales & Marketing | Sprout Social | 7.3 | 9.6 | 24.5 | 12.3 | 8.8 | – | – | – | – | – |
| ERP & Supply Chain | SPS Commerce | 5.9 | 7.5 | 9.5 | 9.4 | 11.4 | 30.2 | 33.9 | 46.0 | 42.4 | 55.0 |
| Security | Tenable | 6.4 | 6.4 | 8.2 | 7.1 | 6.1 | – | – | – | – | – |
| Analytics & Data Management | Teradata | 2.1 | 1.3 | 2.6 | 2.1 | 2.4 | 24.0 | 13.6 | 13.7 | 16.9 | 18.1 |
| Sales & Marketing | The Trade Desk | 13.8 | 23.0 | 29.9 | 16.8 | 18.1 | 68.1 | 111.0 | 214.5 | 157.7 | 142.4 |
| Other SaaS | Toast | – | – | 13.9 | 3.1 | 2.5 | – | – | – | – | – |
| Communications & Collaboration | Twilio | 13.2 | 17.4 | 20.0 | 3.3 | 2.1 | – | – | – | – | – |
| Vertically Focused | Tyler Technologies | 7.9 | 11.9 | 12.5 | 8.7 | 8.8 | 35.9 | 51.5 | 60.5 | 41.5 | 43.6 |
| Analytics & Data Management | UiPath | – | – | 32.5 | 7.8 | 6.1 | – | – | – | – | – |
| Other SaaS | Upland Software | 5.3 | 4.7 | 5.1 | 2.5 | 1.6 | 246.2 | 58.8 | 85.8 | 52.7 | – |
| Security | Varonis Systems | 7.0 | 10.2 | 14.3 | 5.9 | 5.0 | – | – | – | – | – |
| Vertically Focused | Veeva Systems | 18.0 | 23.9 | 22.9 | 12.3 | 11.3 | 65.1 | 85.9 | 79.6 | 54.1 | 59.5 |
| Other SaaS | Verint Systems | 2.6 | 2.4 | 4.2 | 4.1 | 3.2 | 26.5 | 23.7 | 29.0 | 28.1 | 20.3 |
| Analytics & Data Management | Verisk Analytics | 10.0 | 13.6 | 13.6 | 12.8 | 13.4 | 25.6 | 23.5 | 25.8 | 18.4 | 24.9 |
| Analytics & Data Management | Veritone | 1.1 | 3.4 | 6.0 | 1.6 | 1.2 | – | – | – | 47.8 | – |
| Financial Applications | Vertex | – | 9.5 | 6.6 | 4.1 | 5.7 | – | – | 67.1 | 38.1 | 61.0 |
| Dev Ops & IT Management | WalkMe | – | – | 9.5 | 2.4 | 2.3 | – | – | – | – | – |
| Communications & Collaboration | Weave | – | – | 9.8 | 1.6 | 2.6 | – | – | – | – | – |
| Human Capital Management | Workday | 11.4 | 9.9 | 11.7 | 6.5 | 7.5 | – | 489.3 | 159.3 | 194.3 | 94.4 |
| Communications & Collaboration | Workiva | 6.9 | 6.6 | 12.7 | 7.3 | 8.4 | – | – | – | – | – |
| Sales & Marketing | Yext | 5.9 | 4.7 | 3.6 | 1.2 | 1.9 | – | – | – | – | 46.9 |
| Sales & Marketing | ZoomInfo | – | 15.5 | 14.2 | 17.0 | 7.7 | – | 83.3 | 49.6 | 56.5 | 23.0 |
| Security | Zscaler | 17.3 | 21.4 | 27.5 | 14.0 | 11.5 | – | – | – | – | – |
| Financial Applications | Zuora | 5.8 | 3.9 | 5.3 | 2.4 | 2.5 | – | – | – | – | – |
Many of the companies in the cohort (15 companies) have some sort of vertical focus, meaning they provide B2B solutions to specific sectors, think AppFolio for real estate or Health Catalyst for healthcare providers. Other significant subsectors include Sales & Marketing, Communication & Collaboration, DevOps & IT Management and Security.
Source: SEG
“Other” is comprised of 11 companies, which included Biotech, Insurance and Hospitality among others.
To calculate the median multiples across the cohort, and how these are distributed, we used Enterprise Value, Revenues and EBITDA data extrapolated from YCharts.com.
Editorial Note: while we used to report quarterly data from 2020 to 2022 in order to show at a granular level how the market was reacting to the sudden changes caused by the COVID-era investment landscape, we have subsequently switched to annualised data, which better shows long-term trends dictated by the macroeconmic environment, which are more representative of the current market forces at play.
B2B SaaS Valuation Multiples
The median EV / Revenue multiple for public B2B SaaS businesses more-than-doubled throughout 2020, from 6.5x (Q1 2020) to 15x (Q1 2021). This refers to the Trailing Twelve Months (TTM) Revenue of the companies in the cohort.
However, after stalling between 12x and 15x throughout all of 2021, Revenue multiples for B2B SaaS were more-than-halved throughout 2022, continuing on a downward trend last year, with the data-point for 2023 well below pre-pandemic levels at 5.8x.
Source: SEG
B2B SaaS revenue multiples followed a trend comparable to that of its counterparts in the broader SaaS sector.
The quartiles analysis shows how the increase of variance, especially in the upper quartiles, goes hand in hand with positive economic conditions and investor sentiment. In 2022, along with high-inflation, looming recession indicators and skyrocketing energy prices, the top performers in terms of multiples can no longer command such a high valuation premium compared to their revenue, with variance decreasing tenfold by 2023.
Source: SEG
In the chart above, the lines indicate the range of EV/Revenue multiples in our cohorts, while the boxes highlight the Interquartile Range (IQR), which is where the median 50% of the cohort ranks based on their valuation multiple.
The SaaS space—and the B2B subsector in particular—are known for highly rewarding profit-making companies, which are still only a fraction of the total: about a third of the cohort used for this analysis.
Shooting up from just over 30x to over 55x between 2019 and 2021, median EBITDA multiples anticipated their Revenue counterparts, beginning to decrease steadily from the second quarter of 2021.
In 2023 the median EBITDA multiple for B2B SaaS companies in the cohort was 29.7x, in line with pre-pandemic levels.
Source: SEG
Differently from what we saw with Revenue multiples, however, overall variance of EBITDA multiples has remained about the same over the past five years, sometimes even stretching out the upper quartile in 2022, despite the unfavourable market.
This goes to show how companies that are able to prove their profitability even through adverse macroeconomic conditions can still command a premium on their valuation.
Source: SEG
In the chart above, the lines indicate the range of EV/EBITDA multiples in our cohorts, while the boxes highlight the Interquartile Range (IQR), which is where the median 50% of the cohort ranks based on their valuation multiple.
The information available on this page is of a general nature and is not intended to provide specific advice to any individuals or entities. We work hard to ensure this information is accurate at the time of publishing, although there is no guarantee that such information is accurate at the time you read this. We recommend individuals and companies seek professional advice on their circumstances and matters.
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