Did we just experience a "Before, and After" day?
4/6/25 Benchmarks for Operators
Why does half the software built for CFOs look like it was designed in 2003… by someone who hates joy?
Finance teams deserve better.
Mercury gets it. They built a banking* experience that’s actually enjoyable (speaking as a customer here). It’s clean. It’s powerful. It works.
Not only does Mercury offer banking* — it also offers financial software with smart workflows, tactical tools, and useful templates.
Speaking of templates…
Mercury’s own CFO, Daniel Kang, is sharing his personal forecast model — the one he’s used to raise capital, update the board, and guide ops.
Whether you’re prepping for a fundraise, revising plans, or just making sense of the madness, this model will help you align your team, clarify goals, and communicate with confidence.
*Mercury is a financial technology company, not a bank. Banking services provided through Choice Financial Group, Column N.A., and Evolve Bank & Trust; Members FDIC.
Proud to report my 401k has been liberated. (From all gains.)
Despite economic evidence on the efficacy of tariffs dating back to the time of Jesus Christ and grain traders on the Mesopotamian plains, the U.S. decided to slap levies on all major trade partners.
The result? A $1.8 trillion one-day loss in global equities—the worst hit since COVID.
I’m not an economist. I’m not a journalist.
I do, however, hold the academic distinction of scoring a 5 on the AP US History exam junior year of high school, and recall that Smoot-Hawley led to a collapse in global trade and shoved us into the Great Depression. Shout out Mr. DeSorgher.
I am someone who studies valuation multiples and how macro shockwaves ripple into tech stacks. And while this isn’t a direct hit to IP-heavy companies selling stuff you cannot hold—it’s definitely not net good.
It caused the median SaaS multiple to contract below 5x, levels we’ve only seen three times in the last ten years.
Based on the trends, we might view this as a “before, and after” type event where the state of the economy was never the same; the day we (chose) to walk off a cliff.
Talked to an investor yesterday. His take on companies that rely on global supply chains?
“Like, really fucked.”
Even if you don’t move atoms, your customers probably do—and their budgets are about to feel like they got clotheslined.
You know who drops a bag on ERPs? Nike.
Who keeps cloud spend cranked to 11? Lululemon. FP&A tools? Ralph Lauren—just kidding, they probably run on spreadsheets.
We’ll see it first in slower procurement cycles. Then in deferred renewals. Then in CFOs asking, “Can’t we just use [old tool xyz] for one more quarter?”
We’re watching a self-inflicted, COVID-like shock ripple across sectors. Not just retail. All of it.
People forget how non-linear the knock-on effects are when you mess with supply chains. It starts slow. Then it’s sudden. Then it’s: “Why can’t I buy a desk?”
The one I’m writing this on?
Took 10.5 months to arrive from Pottery Barn in 2022.
Peter Goodman, business reporter and author of “How the World Ran Out of Everything: Inside the Global Supply Chain” says,
“Think about the last great shock we experienced… the Pandemic. We ended up with shortages of goods, we ended up discovering our supply chains were not very resilient, and a lot of confusion.”
Every company on earth is now being forced to rethink where they’re buying and selling, and absorb a dramatic new set of terms (The Daily).
Who (in tech) stands to quietly benefit?
A few tech and tech-enabled players could actually thrive in a world where new stuff is delayed, expensive, or just plain stuck at port:
Recommerce platforms (Poshmark, ThredUp, TheRealReal)
Maintenance Workflow Software (ServiceTitan, UpKeep, Fiix)
Parts Discovery & Procurement Platforms (PartsTech, Zoro).
Refurb & Reverse Logistics (Optoro, Loop)
Smart Inventory & Demand Planning Software (Anaplan, NetSuite)
What about deals?
So how does this all trickle down into capital markets and deal flow?
Investors hate uncertainty. It makes the inputs in their fancy DCF models less reliable. We’ve injected greater anxiety into macro conditions, which directly impacts the micro of deals getting done.
When I worked for a marketplace that enabled the sale of aftermarket car parts, my friend Perry would always say:
“Brake pads might get delayed, but they never get denied.”
Some deals will get delayed, others will indeed get denied. Expect fewer board approvals, longer diligence cycles, and more investors asking:
“What happens if the container rate doubles… again?”
And the net of it is—we aren’t moving forward. Not yet.
What about operations?
Sometimes you gotta keep calm and carry on. This falls into the bucket of “things you can’t control.”
Things I wouldn’t do:
Hire ahead of plan. Headcount is a fixed cost you can’t unwind easily. Stick to your annual roadmap unless revenue meaningfully outpaces it.
Sign multi-year contracts. Unless the discount is substantial and you’re confident in long-term usage. Flexibility is worth more than a 10% break if you end up pivoting.
Things I would do:
Review budgets monthly, not quarterly. The pace of change is too fast. Look for early signs of spend slipping—or getting squeezed.
Track pipeline exposure to non-tech customers. They’ll be the first to pull back. Flag delayed deal cycles or unusually quiet buyers.
Over-communicate with employees. Treat them like adults. Be honest about what you know—and what you don’t. Silence breeds assumptions, and assumptions rarely land in your favor.
We’re not in control of the tariffs, the trade routes, or the ten-month Pottery Barn desk wait. But we can control how fast we sense and adapt. That’s your edge.
Stay nimble, my friends.
TL;DR: Multiples are DOWN week-over-week.
Top 10 Medians:
EV / NTM Revenue = 12.6x (DOWN 2.6x w/w)
CAC Payback = 28 months
Rule of 40 = 54%
Revenue per Employee = $391k
Data Source: Koyfin
Figures for each index are measured at the Median
Median and Top 10 Median are measured across the entire data set, where n = 111
Population Sizes:
Security: 18
Database and Infra: 14
Backoffice: 16
Marcom: 16
Marketplace: 15
Fintech: 16
Vertical SaaS: 16
Revenue Multiples
Revenue multiples are a shortcut to compare valuations across the technology landscape, where companies may not yet be profitable. The most standard timeframe for revenue multiple comparison is on a “Next Twelve Months” (NTM Revenue) basis.
NTM is a generous cut, as it gives a company “credit” for a full “rolling” future year. It also puts all companies on equal footing, regardless of their fiscal year end and quarterly seasonality.
However, not all technology sectors or monetization strategies receive the same “credit” on their forward revenue, which operators should be aware of when they create comp sets for their own companies. That is why I break them out as separate “indexes”.
Reasons may include:
Recurring mix of revenue
Stickiness of revenue
Average contract size
Cost of revenue delivery
Criticality of solution
Total Addressable Market potential
From a macro perspective, multiples trend higher in low interest environments, and vice versa.
Multiples shown are calculated by taking the Enterprise Value / NTM revenue.
Enterprise Value is calculated as: Market Capitalization + Total Debt - Cash
Market Cap fluctuates with share price day to day, while Total Debt and Cash are taken from the most recent quarterly financial statements available. That’s why we share this report each week - to keep up with changes in the stock market, and to update for quarterly earnings reports when they drop.
Historically, a 10x NTM Revenue multiple has been viewed as a “premium” valuation reserved for the best of the best companies.
Efficiency Benchmarks
Companies that can do more with less tend to earn higher valuations.
Three of the most common and consistently publicly available metrics to measure efficiency include:
CAC Payback Period: How many months does it take to recoup the cost of acquiring a customer?
CAC Payback Period is measured as Sales and Marketing costs divided by Revenue Additions, and adjusted by Gross Margin.
Here’s how I do it:
Sales and Marketing costs are measured on a TTM basis, but lagged by one quarter (so you skip a quarter, then sum the trailing four quarters of costs). This timeframe smooths for seasonality and recognizes the lead time required to generate pipeline.
Revenue is measured as the year-on-year change in the most recent quarter’s sales (so for Q2 of 2024 you’d subtract out Q2 of 2023’s revenue to get the increase), and then multiplied by four to arrive at an annualized revenue increase (e.g., ARR Additions).
Gross margin is taken as a % from the most recent quarter (e.g., 82%) to represent the current cost to serve a customer
Revenue per Employee: On a per head basis, how much in sales does the company generate each year? The rule of thumb is public companies should be doing north of $450k per employee at scale. This is simple division. And I believe it cuts through all the noise - there’s nowhere to hide.
Revenue per Employee is calculated as: (TTM Revenue / Total Current Employees)
Rule of 40: How does a company balance topline growth with bottom line efficiency? It’s the sum of the company’s revenue growth rate and EBITDA Margin. Netting the two should get you above 40 to pass the test.
Rule of 40 is calculated as: TTM Revenue Growth % + TTM Adjusted EBITDA Margin %
A few other notes on efficiency metrics:
Net Dollar Retention is another great measure of efficiency, but many companies have stopped quoting it as an exact number, choosing instead to disclose if it’s above or below a threshold once a year. It’s also uncommon for some types of companies, like marketplaces, to report it at all.
Most public companies don’t report net new ARR, and not all revenue is “recurring”, so I’m doing my best to approximate using changes in reported GAAP revenue. I admit this is a “stricter” view, as it is measuring change in net revenue.
Operating Expenditures
Decreasing your OPEX relative to revenue demonstrates Operating Leverage, and leaves more dollars to drop to the bottom line, as companies strive to achieve +25% profitability at scale.
The most common buckets companies put their operating costs into are:
Cost of Goods Sold: Customer Support employees, infrastructure to host your business in the cloud, API tolls, and banking fees if you are a FinTech.
Sales & Marketing: Sales and Marketing employees, advertising spend, demand gen spend, events, conferences, tools.
Research & Development: Product and Engineering employees, development expenses, tools.
General & Administrative: Finance, HR, and IT employees… and everything else. Or as I like to call myself “Strategic Backoffice Overhead.”
All of these are taken on a Gaap basis and therefore INCLUDE stock based comp, a non cash expense.
A great but sobering description of what I hope doesn’t happen.