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.
- Both revenue & EBITDA multiples have bounced back significantly but comparing Q2 multiples to the 30-month average, only US Horizontal exceeds both revenue and EBITDA 30-month average, with US Vertical exceeding just the revenue multiple.
- US Vertical revenue multiples rocket 54% to 6.2x, however still remains lower than US SaaS and US Horizontal which recovered at c.27%, similar to Europe. UK Small & Mid Cap experienced the slowest recovery, with revenue multiples gaining only 5.5% during Q2.
- EBITDA multiples rise for all categories except UK Small & Mid Cap which still remain at Q4 2018 levels. US Horizontal EBITDA multiples are higher than US SaaS for only the second quarter since mid-2017. However, all EBITDA multiples remain lower Y.o.Y and there has been little change in the median EBITDA margin during Q2.
- HR Tech subsector is the clear winner in our Enterprise Value growth index due to the new ‘work from home and office’ environment. Median forecast annual revenue growth continued to contract for all categories, with UK Small & Mid Cap worst affected, reducing by a half to 5.9%.