I’m just gonna be straight with you… there’s a TON of bad business advice flying around right now…
“Companies are only hiring AI engineers”…
“You need VC money to scale”…
“This economy is bad for starting a business”…
If you’ve fallen for any of these oft-repeated assumptions, you need to read Mercury’s data report, The New Economics of Starting Up. Mercury surveyed 1,500 leaders of early-stage companies across topics ranging from funding, AI adoption, hiring, and more, to set the record straight.
What they discovered is equal parts surprising and encouraging:
79% of companies surveyed, who have adopted AI, said they’re hiring more because of it.
Self-funding is the number one avenue for accessing capital — even for tech companies, with half likely to bootstrap.
87% of founders are more optimistic about their financial future than they were last year, despite prevailing uncertainties.
To uncover everything they learned in the report, click the link below.
*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.
FP&A Director Role - PE Backed SaaS in SF (+$300M ARR)
Do you work in FP&A?
Did you previously work in investment banking or consulting before becoming an operator?
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‘Mostly Talent’ (LOL, that’s me) is playing matchmaker. Not recruiter. Matchmaker.
If you’re that candidate, click here.
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Raising the Bar
Zeta Global is a publicly traded AI marketing cloud, one of the 147 companies we track on a weekly basis. And they’ve beaten and raised their earnings guidance for 15 consecutive quarters. The streak is nearly four fiscal years long now.
I interviewed their CFO, Chris Greiner, on the RTN podcast and asked if that pressure gets to them:
“You've got 15 straight quarters of beat-and-raise… that's something to put up on the fridge. Does that pressure add up, Chris? Is there a cost to that streak, not financially, but emotionally and culturally, like, “Oh, wow, 15 in a row?”
He didn’t even pause:
“No, because we're not even halfway to what great is.
I'll tell you a funny story.
Do you know who Sergey Bubka is?”
The story dates back to his days at IBM. He worked under the father of IBM software, Steve Mills. Steve wasn’t one to decorate his office ornately. He had just one picture in it: a Soviet era pole vaulter, sprinting to his take off spot.
One day Chris finally got the guts up to ask him, “Why do you have this picture of this Soviet era pole vaulter?”
Steve looked at him like he had three heads.
“Well, don't know who Sergey Bubka is?”
And I said, “No, I don't know who Sergey Bubka is.”
“Well, he's a world record holding pole vaulter in the Soviet Union.”
Legend has it that Sergey was incentivized by the government to keep setting world records. He’d get a huge stipend each time he set a world record. So he wouldn’t beat it by six or eight inches; he would just beat it by the smallest of margins to get that bonus.
He went on to beat his own world record 36 straight times.
“Ultimately, he is the epitome of beat-and-raise.”
Today’s Sergey Bubka
There isn’t an official scoreboard. But according to Zack’s, Adobe has beaten and raised earnings for 25 consecutive quarters as of June 2025. I guess that switch to reliable, predictable subscription revenue was worth it.
Home Depot had a long run (19 straight) but the streak ended in May 2025 when it missed EPS by a hair.
The winner by my arm chair research: Parker-Hannifin (PH), a leader in something called motion control, coming in at 39 consecutive quarters.
Honorable mention: While not earnings related, Equinix (EX) has increased revenues quarter over quarter for 80 consecutive periods, the longest in the S&P 500.
Much like Bubka, there’s an art and a science to consistently beating your target in the public markets (and even privately with your board). You want to exceed expectations, but not by an amount that sets the bar unsustainably high for the next quarter.
In this way you’re playing both finite and infinite games. In the short term you want to check the box and collect credit where credit is due. And in the long term you want to secure the right to just keep playing the game. Winning at both games is how world records are set.
Chris Greiner of Zeta Global on RTN
Build Your Own Beta and Raise Model
If you want to build your own beat and raise forecast, paid readers can download a template below.
TL;DR: Multiples are FLAT week over week.
The top ten is officially back up over 20x forward revenue. This is 4x the overall median of just under 5x.
Top 10 Medians:
EV / NTM Revenue = 20.8x (DOWN 0.2x w/w)
CAC Payback = 24 months
Rule of 40 = 49%
Revenue per Employee = $575k
Figures for each index are measured at the Median
Median and Top 10 Median are measured across the entire data set, where n = 147
Recent changes
Added: Bullish, Figure, Gemini, Stubhub, Klarna
Removed: Olo, Couchbase
Population Sizes:
Security & Identity = 17
Data Infrastructure & Dev Tools = 13
Cloud Platforms & Infra = 15
Horizontal SaaS & Back office = 19
GTM (MarTech & SalesTech) = 19
Marketplaces & Consumer Platforms = 19
FinTech & Payments = 28
Vertical SaaS = 17
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
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.
OPEX
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.
Please check out our data partner, Koyfin. It’s dope.
Wishing you a forecast you can beat, and raise,
CJ
