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.
- US SaaS revenue multiples have been peaking since March 2019 but are showing signs of a potential downturn occurring in Q4 2019, supported by their 7% drop in multiples since Q2. However, their median EBITDA margin has been outperforming the other categories, rising 1.4% versus their average 2% decline.
- US Horizontal revenue multiples took a nose dive, falling 11% from last quarter; effectively ending the period, from Q3 2018, in which it was consistently above US Vertical.
- UK Small & Mid revenue multiples have been stagnant since 2015 and their EBITDA multiples have been slowly falling; not recovering from their 7x plunge in Q4 2018.
- European companies did not experience a decline themselves, instead growing 0.6%, despite the bear-ish market, where there was an average fall of 7% in revenue multiples across the other 4 categories.