Welcome to the latest edition of the Silverpeak Benchmark report – Application Software Sector, a review of key company valuation metrics in the US, UK and European application software sectors. By reviewing sector median averages, our aim is to provide a set of software industry benchmarks against which individual company performance can be measured.
- Software valuations continued their slide in the second quarter amid concerns over recessionary indicators; accentuated by the large proportion of Growth Companies, who tend to suffer more from market volatility.
- EV/revenue multiples have continued to decline across the board, averaging -21%.
US (average -27%) and Europe (-19%) categories have been the most affected by the current economic situation. While the UK only decreased -5%, it continues to have the lowest median multiple.
- In something of a bright spot, EV/EBITDA multiples in the UK remain higher (+20%) than the 12 month period pre-COVID pandemic and in Europe the multiples are only 3% lower then pre-pandemic.
- Investors placed more importance on profitability than forecast revenue growth in Q2 2022 as EV/revenue multiples across categories and sectors saw a heavier correction than EV/EBITDA multiples.