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Apr 26, 2021

Q1 2021 | Software Benchmark report: UK and Europe exceed pre-pandemic highs while US revenue multiples fall

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.

Report highlights

  • Both revenue and EBITDA valuation multiples fell for nearly all US software categories in Q1 2021, stalling the strong recovery and advance shown in the second half of 2020. In Europe and the UK, valuation metrics continue to increase, the exception being European EBITDA multiples which have fallen 18%.
  • Revenue multiples for US Vertical, Horizontal and SaaS application software companies have all fallen in Q1 but remain at or above pre- pandemic highs. In contrast, median revenue multiples for UK Small & Mid and European software companies have continued to increase and are now both above pre-COVID levels for the first time.
  • EBITDA multiples fell significantly in the middle of Q1 for US companies. US Horizontal recovered by the end of March for a median multiple of 40x, now well above SaaS and Vertical multiples of 29x and 26x.EBITDA margins remained stable across most categories, whereas forecast annual revenue growth increased significantly for all.
  • In the Enterprise Value Index, all sub sectors increased or remained constant from Q4’20.However, towards the end of the quarter four of the five verticals showed a downward move, with FinTech as the only exception.HR Tech continues to outperform other sub sectors, although it showed the largest fall of any vertical from February to March.

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