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.
Starting this quarter, we have included a snapshot on European software M&A.
- US SaaS revenue multiples were predicted to continue their descent from Q3, however, they rebounded from a 7.7x trough to end the quarter at 8.2x. Contrastingly, EBITDA multiples have continued to fall, reaching a low of 35.6x in H2 2019 from their H1 peak of 44.0x.
- US Horizontal revenue multiples have done a U-turn since last quarter’s 11% fall; increasing 22.3% to 6.9x.
- UK Small & Mid EBITDA multiples have shot up 3.3x to 19.6x. They look on course to match their historical peak of 22.0x in H2 2018. Furthermore, their median forecast annual revenue growth has doubled since last quarter, showing positive signs for these companies, despite the recent political events surrounding Brexit.
- European revenue multiples were the only ones to fall in Q4. However, they have had the strongest growth in EBITDA margin (+4.9%) out of all the categories.