SaaS Median Operating Ratios

Publicly traded SaaS companies have maintained relatively flat sales & marketing and research & development expenditures, as a percent of revenue over the past year, while cutting back on G&A expense. On a median basis in 4Q16, 36.9% of revenue was spent on S&M, 18.8% on R&D and 16.3% on G&A.

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Public SaaS Companies Nearing GAAP Profitability

Median EBITDA margin for the SEG Public SaaS Index was -4.1% during the final quarter of 2016 and has been trending toward positive territory for the past couple of years. This compares to -9.4% and -13.7% in 4Q15 and 4Q14, respectively. While 60% of the index posted GAAP losses during 4Q16, approximately 70% of the index posted positive cash flow from operations (CFO) in Q4. For additional insight, please see SEG’s 4Q16 Software Industry Financial Report.

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Cisco Acquires AppDynamics for $3.9 Billion

Cisco acquired “unicorn” AppDynamics just prior to their IPO on Tuesday, January 24th. AppDynamics’ best-of-breed cloud application intelligence platform complements Cisco’s network performance management suite to provide customers with enhanced visibility and optimization of their entire IT infrastructure stack.

Cisco’s offer ($3.9 billion Enterprise Value, 18.9x TTM revenue) is nearly 130% higher than AppDynamics’ projected $1.7 billion IPO valuation and nearly 400% higher than the median 5.0x TTM revenue multiple for all publicly traded SaaS companies in 4Q16.

Brief Transaction Details:

Enterprise Value (mm) $3,902.9
TTM Seller Revenue (mm) $206.2
TTM Seller EBITDA (mm) -$105.3
TTM Revenue Multiple 18.9x
TTM EBITDA Multiple
Seller Business Description

AppDynamics, Inc. provides an integrated suite of software application and IT infrastructure monitoring and analytics products.

Buyer Business Description

Cisco is a leading provider of IT infrastructure software and hardware.

For more information, visit CiscoTechCrunch or Bloomberg.

SEG Publishes Q2 2015 Software Industry Financial Report

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Software Equity Group’s complimentary 2Q15 Software Industry Financial Report is available for download. Our 2Q15 Report provides the facts, data and insight you need to keep your finger on the software industry’s pulse.  We’ve assessed how public software, Internet and SaaS companies performed in Q2; how they’ve performed amid the current macro environment and technological disruptions driven by mobile and cloud computing and how their stock prices and market valuations have responded.  Our 2Q15 Report also measures M&A deal volume and exit valuations overall and by software product category.  Our goal is to provide timely information and insight about the financial health, market performance, and acquisition activity of the software industry’s key players and product sectors.

Software Equity Group’s Quarterly and Monthly Reports are widely recognized as the best way to keep your finger on the financial pulse of the software industry.  As testament, our reports are now read and relied upon by more than 70K+ software industry executives, entrepreneurs, venture capitalists, private equity investors and professional advisors in 70+ countries around the globe. Shouldn’t you know what they know?

To obtain your complimentary copy, please click here.

Today’s Public Software Valuation and Financial Performance: The SEG SaaS Index – Other Public SaaS Companies Product Category

SEG’s Monthly Flash Reports track the financial performance and valuations of approximately 300 software companies, categorized in nearly 30 product categories across the on-premise software, SaaS and Internet sectors.  This post highlights the performance of the SEG SaaS Index – Other Public SaaS Companies product category as shown in the SEG February Monthly Flash Report.  To view the performance of dozens of other product categories, download the latest complimentary Monthly Flash Report here: http://www.softwareequity.com/research_flash_reports.aspx

 

In the month of January, the Other Public SaaS Companies product category achieved a median EV/Revenue multiple of 4.5x, TTM Revenue Growth of 23.9%, and EBITDA Margin of -17.7%.  Notable companies outperforming their respective category include:

  • New Relic with a 15.7x EV/Revenue multiple
  • FireEye with a 150.0% revenue growth
  • J2 Global with a 41.8% EBITDA margin

SEG SaaS Index – Other Public SaaS Companies, SaaS, Other Public SaaS Companies, Public, Valuations, Financial Performance, Box, ChannelAdvisors, Covisint, Demandware, FireEye, HortonWorks, InContact, IntraLinks Holdings, J2 Global, Jive Software, New Relic, Liquid Holdings Group, Qualys, RingCentral, Rally Software Development, Service-now.com, Tableau Software, Tangoe, TrueCar, Upland Software, Workiva, Yodlee, Zix