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“A revenue multiple is only a measure of conviction in your story”

-Sell side equity analyst

Companies who receive premium valuations have more than just great looking financial statements - they have strong undercurrents of believability.

Revenue multiples are, in a way, a measure of trust. How much do I believe you are going to do what you said you were going to do? How much do I believe in the long term business model you’ve put in front of me?

It’s no wonder why some of the highest trading tech companies today are both free cash flow positive and run by leadership who have personally built up credibility with sell side analysts for decades. The credibility of a lot of CEOs and CFOs are on the line when it comes to long term forecasting.

There are three parts to consider when someone tells a story:

  1. The historical context

  2. The narrative

  3. The person telling it

People (and markets) hate uncertainty. And they get some comfort from a compelling and convincing story, told by someone with prior success.

A wise man once told me:

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“Great companies can be terrible stocks if they aren’t predictable.”

Whether you’re operating a public or a private company, the sentiment rings true.

TL;DR: Multiples are UP week-over-week.

Top 10 Medians:

  • EV / NTM Revenue = 12.7x (+ 0.4x w/w)

  • CAC Payback = 16 months (-4 months w/w)

  • Rule of 40 = 42% (-6% w/w)

  • Revenue per Employee = $495K (+$93K w/w)

  • Figures for each index are measured at the Median unless otherwise stated

  • Average, Median, and Top 10 Median are measured across the entire data set, where n = 102

  • Population Sizes:

    • Security: 17

    • Database and IT Mgmt: 14

    • Backoffice: 18

    • Marcom: 17

    • Marketplace: 16

    • Vertical SaaS: 20

  • If you’d like the company level metrics used in these reports, upgrade to paid and you can download the excel sheet at the bottom of this post

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