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- Our SaaS universe's average enterprise value multiple of 2024 estimated revenue was 6.8 at the end of the September quarter, up from 6.4 last quarter. For 2025 estimated revenue, the average multiple was 6.0, up from 5.6 last quarter.
- Revenue growth in 2024 is now expected to be 13.2% on average, down from 13.4% last quarter. In 2025, revenue is expected to grow 13.0% on average, down from 14.2% last quarter.
- Correlations between enterprise value multiples of revenue and revenue growth rates remain at or near longer-term normal levels.
- Our SaaS universe stocks appreciated 3.0% on average in the quarter, lagging the S&P 500's 5.1% gain. Merger and acquisition activity among the public companies remains solid with continued purchases by private equity funds.
TABLE OF CONTENTS
Overview of our analysis
Correlation of valuations to growth drops modestly
M&A activity remains solid
Average 3% Q3 SaaS stock price gain lagged the S&P 500
SaaS M&A: Notable transactions include Recorded Future and Instructure
SaaS private placements: Notable transactions include Protect AI, Spring Health
Overview of our analysis
Our SaaS universe stocks gained 3.0% on average in the September quarter, underperforming the S&P 500, which continued to make new highs with a 5.1% gain. While the average gain was low, results varied widely for many stocks in our SaaS universe, with eight stocks gaining over 30% and six losing over 30%. Once again, positive performance generally depended on good earnings and solid forward guidance. The average SaaS enterprise value multiple of estimated 2024 revenue at the end of the quarter was 6.8, up from 6.4 last quarter. For 2025, the average multiple was 6.0, up from 5.6 last quarter. Revenue growth in 2024 was expected by analysts to be 13.2% on average, down from 13.4% last quarter. In 2025, growth was expected to decrease to 13.0% from 14.2% last quarter, reflecting the influence of softer guidance.