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 continued to bounce back significantly. All categories now record both revenue and EBITDA multiples which exceed the 24- month average, with 6 of the 10 multiples reaching record levels.
- US application software median revenue multiples continue to chart new all-time highs in Q4’20. US Horizontal recorded the lowest growth in revenue multiple across all categories of 10.5%. For the first time since mid-2018, US Horizontal revenue multiples are now lower than US Vertical multiples, despite recording the largest increase in its forecast annual revenue growth from 7% to 11%.
- EBITDA multiples for the US Horizontal, Europe and UK Small & Mid have reached the highest levels on record. US SaaS and US Vertical EBITDA multiples recover strongly, though remain below their peak. However, the median EBITDA margin has not changed significantly in Q4 for any categories.
- HR Tech continues to outperform other sub sectors in our Enterprise Value index, despite signs of downward trend at the start of the quarter. The 5 subsectors all increased at varying levels across the quarter, finishing at high points with the exception of FinTech which is still below its January 2019 level.