Outliers to the high side and low side have certainly existed throughout time, and there were many more (mostly to the high side) over the last two years, but the bulk of valuation events have remained in this range. Investors' IRR (investor specific) Inflation is a big one. They were also the stocks to see the greatest decline post-peak Snowflake from 133x to 62x, Zoom from 54x to 11x, Coupa from 43x to 13x, and Fastly from 37x to 10x. Available: https://www.statista.com/statistics/1030065/enterprise-value-to-ebitda-in-the-technology-and-telecommunications-sector-worldwide/, Average EV/EBITDA multiples in the technology & telecommunications sector worldwide from 2019 to 2022, by industry, Available to download in PNG, PDF, XLS format, Global wireless infrastructure revenue 2020-2022, by segment, Telecommunications and Pay TV services revenue 2019-2020, by region, Global revenue of mobile operators 2021-2025, Telecom services: global spending forecast 2008-2023, Sectors for potential new revenue streams according to telecom operators 2020 to 2025, Average revenue per mobile user (ARPU) per sim card 2015-2020, by country, Top countries by number of mobile-cellular telephone subscriptions 2020, LTE mobile subscriptions worldwide 2011-2027, 5G mobile subscriptions worldwide 2019-2027, by region, Global market share of mobile telecom technology 2016-2025, by generation, Number of fixed telephone lines worldwide 2000-2021, Number of fixed-telephone subscriptions worldwide by region 2005-2021, Number of fixed broadband subscriptions worldwide 2005-2021, Number of fixed broadband subscriptions worldwide by region 2005-2021, Fixed broadband internet subscription rate 2021, by region, Revenue of AT&T by segment 2017-2021, by quarter, Vodafone revenue in the United Kingdom (UK) 2014-2022, Market share of telecoms operators in the UK 2007-2021, by broadband subscribers, Market share of 5G base stations in China 2021, by provider, Leading telecom infrastructure companies by brand value 2022, Forecast number of mobile users worldwide 2020-2025, 5G infrastructure market revenues worldwide 2020-2030, Adoption of 5G connection in 2030 by region, Number of 5G connections worldwide by region 2021-2025, EV/EBITDA in the technology & telecommunications sector Europe 2019-2022, by industry, EV/EBITDA in the finance, insurance & real estate sector in Europe 2020, by industry, EV/EBITDA in the energy & environmental services sector Europe 2019-2022, by industry, EV/EBITDA in energy & environmental services worldwide 2019-2022, by industry, EV/EBITDA in the consumer goods & FMCG sector in Europe 2019-2022, by industry, EV/EBITDA in the retail & trade sector in Europe 2019-2022, by industry, EV/EBITDA in the health & pharmaceuticals sector in Europe 2019-2022, by industry, EV/EBITDA in the retail & trade sector worldwide 2019-2022, by industry, Price earning in the energy & environmental sector in Europe 2022, by industry, EV/EBITDA in the consumer goods & FMCG sector worldwide 2019-2022, by industry, Price earning in the media & advertising sector in Europe 2022, EV/EBITDA in the metals & electronics sector in Europe 2019-2022, by industry, EV/EBITDA in the media & advertising sector worldwide 2019-2022, by industry, Price earning in the finance, insurance & real estate firms in Europe 2022, EV/EBITDA in the media & advertising sector in Europe 2019-2022, by industry, Price earning in the consumer goods & FMCG in Europe 2022, by industry, EV/EBITDA in the transportation & logistics sector in Europe 2019-2022, by industry, EV/EBITDA in the finance, insurance & real estate sector worldwide 2020, by industry, EV/EBITDA in the transportation & logistics sector worldwide 2022, by industry, Price earning in the chemicals and resources sector in Europe 2022, by industry, Find your information in our database containing over 20,000 reports. On Damodaran excel published on Jan22 for the 2021 year (US companies), the EBITDA multiple for airlines is 17,6x whereas you put 24,89x (I took the one for EBITDA positive firms). Regarding risk of a worsening economy, from prior research into how SaaS companies perform in a recession, we know that growth rates will slow, and companies will drive towards profitability, but will otherwise survive an economic downturn fairly unscathed. Would be cool to see recent ones? Chart. Or in principle i should reduce/increase the multiple since the company is private and the report is for for public ? Would it be possible to share the dataset? If its the former, then it may be more likely to be influenced by the growth of the particular industry it serves, rather than just correlating with the events industry as a whole. Partners Hi there, thanks for your comment. But remember, we need to adjust for gross margin. Is this including an earn-out phase? Like some of the others on this thread, I cannot download the dataset. If its the latter, there are references to EBITDA multiples of between 10 and 13 for selected companies in the B2B events space, which you might want to consider. Thanks for getting in touch, interesting question! 2022. Would love to download data for the software tech companies, but it appears that the links to leave an email address are broken on every page, so replying in the comments here is the only way to communicate (unless I want to use the gmail address which you have warned us not to use. The recent market tumble is a valuation reset driven out of fear of future operational challenges. As a result, revenue multiples can be applied to virtually any technology company which has sales revenue. This flurry of M&A and IPO activity indicated a lot of froth in both the public and private markets at the time. 539. Tage Kene-Okafor. on exits for We estimate that the discount widened [datahere] to ~50% over the last two years, with a much higher standard deviation in the private markets than both historical trends and even the public market at the time. Cheers. angel investors. Its not a fool-proof metric, and more importantly, the timing of any coming recession can be years from an inversion event. products that are deeply imbedded and difficult to switch away from. Thanks for your comment on this article! A high growth rate generates more value for a tech company than any other factor as it has the greatest impact on the revenue multiple. I think each computers firewall treats downloads differently. Valuation Report Thanks. And interestingly, most companies in the study exited the Great Financial Crisis growing even faster than at the start of the recession. However, Asana has the fourth-highest multiple of any company in the SCI as its multiple surged 70% this year. The EBITDA multiple will depend on the size of the subject company, its profitability, its growth prospects, and the industry in which it works. Were very happy for you to use an excerpt and link back to us for the full set. We store the data per country rather than by region, as the variance across regions can be quite large. Thx and great work! Lets take a look at what happened in 2022 and where we are now in 2023. The chart below shows the SaaS Capital Index compared to our private valuation estimate. The SaaS community has been using our SaaS Capital Index (SCI) successfully to guide their thinking about valuations for over five years. It should be on your way to your email. Hi, i run a marketplace in the luggages deposit for tourists. As a part of the calculations we also apply a discount rate (looking at risk free rate, industry beta, market risk premium) and an illiquidity discount based on stage of the company. I got the email to confirm my subscription to your blog, but no dataset. Hi! Now, they could ask for $50M in selling price (i.e. Many software companies operate at a loss until they scale to a large enterprise. What do I do now? Report : Tech, Trends and Valuation Two market dynamics now, in retrospect, signaled a market peak at the end of 2021. Hi would love a copy of the data set! Interesting response. Also wish many health and long life to Dr. Damodaran and his site. we're currently still operating with the 2021 multiples, as the 2022 update by . Fortune Business Insights reported that the market size for SaaS has grown from a valuation of $113.82 billion in 2020 to $130.69 billion in 2021 and is on trend to reach $716.52 billion by 2028. I am an MBA student and currently pursuing my project on Valuation of sports franchises (Indian Premier League). Only positive EBITDA companies. Or it might have ended up in spam! Also, there seems to be different industries names too. Every high-growth SaaS company is trying to carve out its position in this massive market trying to become the world's next unicorn or even . The best of the best: the portal for top lists & rankings: Strategy and business building for the data-driven economy: Industry-specific and extensively researched technical data (partially from exclusive partnerships). There is much to consider in valuing these companies. Hello. Advanced Medical Equipment & Technology: 20.99: Advertising & Marketing: 10.55: Aerospace & Defense: 15.27: . IPO price: $30. I try to update the data set once a year and this post was updated at the start of 2021. You can find an extensive list of the companies here: http://www.stern.nyu.edu/~adamodar/pc/datasets/indname.xls. Register in seconds and access exclusive features. Year 3: 152.40%. In Q4 2022, FinTech companies in the SEG Index recorded a median EV/Revenue multiple of 5.4x, less than half compared to pre-pandemic levels. You can see more about the valuation methods we apply here at Equidam, click here. S&P 500 software) did almost three times better than the small software companies. The data is based on the annual estimate provided by Prof. Aswath Damodaran of the New York University for 2023. Another observation in this chart is that the variance in valuations dropped considerably in the last six months the blue dots are more tightly packed together than the green dots. Thanks for sharing your insight, Jim. The chart below shows the 25th, 50th, and 90th percentiles of valuation multiples for the SaaS Capital Index over time. This year and possibly 2023 will not be as smooth as most of the 2010s. If you do not want us and our partners to use cookies and personal data for these additional purposes, click 'Reject all'. They will be more cautious, which will take the shape of longer review and diligence periods, but they still need to do deals and will be looking to put a lot of money into good opportunities. Also, it might be in your spam! Year 2: 126.04% https://www.equidam.com/parameters-update-p5-4-ebitda-multiples/. The multiple of earnings calculation is commonly used in cases where sufficient financial data is available. While the exact value of the deal was never disclosed, reports pin the acquisition at around $2.5 billion. Thanks for the data set found this really useful. Multiples reflect the average price of a company when compared to a value driver, in this case EBITDA. If is more industry rather than consumer focused then Heavy Machinery & Vehicles might be a better guide to the growth potential of your sector. https://support.equidam.com/en/articles/2458541-which-industry-should-i-choose. Ill add the data here for Fintech in UAE, but let me know if another country would be a more appropriate example: Year 1: 1218.40% On rare occasions, it takes a few hours or a day for the email to go through after putting your email in the field. The result is that we see historically high valuation multiples of 10 to 20 times revenue and more for the fast-growing, cloud-based businesses, in contrast to multiples of perhaps one to five times revenue for the rest, giving us our K . As a result, as of September 2020, microcap software companies have much higher valuation multiples: I think investors from, novice to pro, are all dumbfounded. We see from the r-squared values of the two best-fit lines that growth rate alone predicts about 60% of a companys valuation! Can you please send me the dataset? You can see the raw Index datahere. The average EV / EBITDA multiple of all software companies is 12.7x. Constantly beating the market with massive valuations (understand that the big tech really taken over) just makes it tricky to value unlisted young/medium term SAAS businesses. Once this happens, Ill update the valuation multiples for software companies again. The average revenue multiple for small tech companies increase slightly as their market cap increases, from 2.2x to 2.6x. By using the Equidam platform, you can produce a company valuation according to all five of our methods and produce a report that transparently highlights your company value. Convertible Note Calculator Notify me of follow-up comments by email. [Online]. Directly accessible data for 170 industries from 50 countries and over 1 million facts: Get quick analyses with our professional research service. Careers Thanks for getting in touch! The valuation multiples of all publicly traded software companies that have available data is as follows. Contacts May I reference this research in my templates is sell at https://finmodelslab.com? Cost - efficient production in DE / EU (technology / automation - supported) Networking of the value chain across the entire company & with partners (PLC to ERP) ANNEX: EBITDA-multiples by sub-sector: Sep. 2019 (Pre-Covid) - May 2022. The TTM is multiplied by a revenue multiple reflecting the overall performance of the company. "Reevaluate your valuation, understand your burn multiples, . It should be in your inbox if not, it might be in your spam! See full size: Figure 10.2 Private EdTech Early Stage Valuations (Series A) Mean round was $16.3M for 20% dilution, at a pre-money valuation of 9.2x 2022 revenue; Mean forecasted revenue growth . Thank you for your comment on this article. For example, if the majority of your business is in the Gyms, Fitness and Spa Centers category aimed at wellness solutions or experiences, then you would want to look at the multiple there which is 12.27 as of our latest parameters update. The valuation multiples are displayed in the tables below, and are further segmented by industry. As earn outs are very common in startup exists, the valuation should not need large adjustments for a common earn out schedule. To maintain strong multiples, private companies likely will need to demonstrate strong revenue growth, as we expect 2022 could see a return to fundamentals. EBITDA is an acronym that stands for earnings before interest, tax, depreciation, and amortization. The most important variable, as noted, is the growth rate. Ive set it up so that the data set sends directly to your email if you put your email below, it should arrive in your inbox! Private valuations will mirror the public markets, with probably more volatility along the way. Methodology Their performance across several parameters determines their long-run profitability which is then reflected in the SaaS revenue multiple. Multiples can oscillate widely reflecting the buoyancy or misery of the M&A market at that . If you would like to customise your choices, click 'Manage privacy settings'. EBITDA is the Earnings before Interest, Taxes, Depreciation, Amortization, Stock-based compensation and other non-cash charges to the income statement. Both regression formulas predict that in August and February, a company with zero revenue growth would be worth 2.8x ARR. Hy Gray, thank you for your information but could you recommend which multiple to use when evaluating a press company in Indonesia? Ive set it up so that the file gets sent directly to your email in order to prevent blocks from downloading, but not sure what thats occurring! Revenues are the most reliable number because they are at the top of the income statement and are therefore less subject to adjustment based on the companys accounting policies. The two most popular valuation multiples for software firms are EV/Revenue and EV/EBITDA. Bridge rounds and short runway were relatively easily solved in recent times, but we think those situations will become much more difficult this year. SaaS Capital Index Companies with the Largest YTD Multiple Declines The table above shows the companies posting the largest year-to-date multiple declines. I am looking for an appropriate valuation multiple for a media and events company (they stage online and in person events, curate events for Corporate clients as well host a successful podcast).
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