By Christopher White, Managing Director and Thomas Tisone, Vice President | Published 29 April 2026 | Q1 2026 edition.
Silverpeak LLP’s Q1 2026 software valuation benchmarks show a sharp reset across public software markets, as investors reassessed pricing in the face of accelerating AI disruption. EV to revenue multiples fell across every category tracked, with US SaaS posting the steepest quarterly fall at 34 percent. This report sets out what moved, why, and what it means for founders, boards and investors weighing a sale, a raise, or simply where their business now sits against public comparables.
Quarterly key findings
Software valuations fell across all markets in the quarter, with the US hit hardest on both a quarterly and an annual basis. The decline reflects the US market’s greater exposure to previously stretched multiples, which left it proportionally more sensitive to AI disruption, particularly as agentic pricing models put pressure on large vendors that rely on per seat licensing. The sell off was largely indiscriminate rather than targeted at weaker businesses, so Q1 earnings will be an important test: they should start to separate companies with durable fundamentals from those facing longer term structural challenges.
Public valuations continue to track the Rule of 40, and the premium for profitability over growth has widened. Among software companies with comparable Rule of 40 scores, those with stronger profitability traded at a median multiple of 5.6x, against 3.3x for higher growth, lower margin peers. In practical terms, the market is now paying more for companies that can fund AI investment from their own margin than for growth funded by external capital, a meaningful shift from the growth at all costs pricing that prevailed through much of the last cycle.
Depressed public multiples are creating attractive entry points for private equity, and take private activity has picked up as sponsors target software businesses with strong fundamentals at compressed valuations. Strategic acquirers have been more cautious, slowing decision making while they weigh further downside risk in public comparables and assess how quickly new AI tools are changing the build versus buy calculation for target businesses.
What this means for software boards and investors
For boards weighing a sale process, the read across is straightforward: buyers and investors are pricing profitability and defensibility more heavily than growth alone. Businesses that can point to durable revenue, real product differentiation, and enough margin headroom to fund AI capability without external capital are attracting a premium at comparable growth rates. For businesses earlier in that journey, the report’s Rule of 40 and profitability cross tabs give a concrete benchmark for where the market currently draws that line.
More from Silverpeak
Silverpeak is a boutique investment bank specialising in M&A and financing for technology growth companies, and software is one of our core sectors: see our work in the software sector and our wider track record in technology transactions. For the previous quarter’s picture, read our Q4 2025 report on valuations continuing to cool over AI disruption concerns, or see how the story developed in our Q2 2026 report on the valuation gap narrowing between the US and Europe.