SaaS valuation multiples: how they work and 2026 benchmarks
What is a SaaS valuation multiple?
A SaaS valuation multiple is a company's value divided by its revenue: enterprise value ÷ next-12-months revenue for public companies, or valuation ÷ ARR in private deals. A company worth $50M with $10M of ARR trades at 5x. Public SaaS companies had a median of 4.2x in September 2026.
Key facts
- Public SaaS companies traded at a median of 4.2x next-12-months revenue on 25 September 2026, against 20.8x in February 2021. (Clouded Judgement, Sep 2026)
- Growth sets the multiple. Companies growing over 22% had a median of 18.0x, those growing under 15% just 3.3x. (Clouded Judgement, Sep 2026)
- The SaaS Capital Index, market cap over run-rate revenue for 63 public companies, also stood at 4.2x at the end of September 2026. (SaaS Capital Index)
- Private multiples run lower. SaaS Capital: "the private multiples are, all else equal, lower" than its public index. (SaaS Capital, Aug 2025)
- Private SaaS acquisitions priced at a median 4.0x trailing revenue in Q2 2026, by Software Equity Group's count. (SEG, 2026)
SaaS valuation multiples calculator
Enter ARR or next-12-months revenue, the enterprise value or valuation, and expected growth. Use enterprise value (equity value plus debt minus cash) to compare with public companies.
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How to calculate a SaaS valuation multiple
Valuation multiple = Enterprise value ÷ Revenue (next 12 months, trailing 12 months or ARR)
In words: divide what the company is worth by its revenue, and always say which revenue.
- Enterprise value: Equity value plus debt minus cash. Private rounds quote post-money valuation instead, which includes the cash just raised.
- Revenue base: Next-12-months (NTM) consensus revenue for public comparables, trailing-12-months (TTM) revenue in M&A data, or ARR and run-rate revenue for private companies.
- Growth-adjusted multiple: The multiple divided by the growth rate in percentage points. A 5x company growing 25% has a growth-adjusted multiple of 0.20.
Worked example
An illustrative company valued at $50M of enterprise value, with $10M of ARR and 25% expected growth. The results below are computed by the calculator's tested code.
| Input | Value |
|---|---|
| ARR | $10,000,000 |
| Enterprise value | $50,000,000 |
| Expected growth (%) | 25% |
Revenue multiple: 5.00x Growth-adjusted multiple (multiple ÷ growth %): 0.20
50,000,000 ÷ 10,000,000 = 5.00x
5.0x ARR, between the public median (4.2x) and 75th percentile (7.9x). Growth-adjusted it's 0.20, below Meritech's public-software median of 0.27x on its own growth-adjusted measure, so the price looks modest for 25% growth. Private companies usually trade at a discount to public peers, though (our reading).
In a spreadsheet
- Revenue multiple, with enterprise value in B2 and revenue or ARR in C2: =B2/C2
- Enterprise value, with equity value in B3, debt in C3 and cash in D3: =B3+C3-D3
- Growth-adjusted multiple, with the multiple in E2 and growth in percentage points in F2: =E2/F2
- Implied valuation at a target multiple in G2: =C2*G2
How founders and investors read valuation multiples
If you're the founder
- Growth earns the multiple. Companies growing over 22% had a median of 18.0x next-12-months revenue in September 2026, those growing under 15% just 3.3x.
- Retention earns a premium too. Software Equity Group found public companies with net retention above 110% traded at "a median 8.0x EV/TTM revenue", "a 77.8% valuation premium relative to the 90%-110% cohort" (SEG, 2026).
- Expect a private discount. SaaS Capital: public index movements are "a directional guide to what private companies can expect with valuation multiples, though the private multiples are, all else equal, lower."
Questions you'll be asked
- Is that a multiple of ARR, trailing revenue or forward revenue?
- Pre-money or post-money, and how much cash is on the balance sheet?
- Which public or private comparables justify it?
- How does your growth compare with theirs?
If you're the investor or LP
- Medians hide the spread. On 25 September 2026 the top five public companies had a median of 39.7x against 4.2x overall.
- Revenue multiples are a shorthand. Jamin Ball: "Given most software companies are not profitable, or not generating meaningful FCF, it’s the only metric to compare the entire industry against."
- Check the exit multiple. A private round priced well above today's public multiples needs growth to close the gap before any sale or IPO.
Questions to ask the company
- What is the growth-adjusted multiple against comparables?
- What multiple does the round imply on next year's ARR?
- What free cash flow multiple does it imply?
- What exit multiple does the return case assume?
What is a good SaaS valuation multiple in 2026?
Public SaaS companies traded at a median of 4.2x next-12-months revenue in September 2026, from 2.6x at the 25th percentile to 13.0x at the 90th. Growth explains most of the spread. Private companies usually trade below public peers, while elite private AI companies raise at 20x ARR or more.
Show the numbers
| Week of | Overall median | Top-5 median |
|---|---|---|
| Feb 2021 | 20.8x | 61.5x |
| Sep 2025 | 5.2x | 22.4x |
| Feb 2026 | 3.6x | 16.4x |
| Jun 2026 | 2.9x | 26.7x |
| Sep 2026 | 4.2x | 39.7x |
Benchmarks
| Segment | Measure | Typical | Top quartile | As of | Sample | Source |
|---|---|---|---|---|---|---|
| Public SaaS companies | ||||||
| Public cloud software | EV ÷ next-12-months revenue | 4.2x (25th percentile 2.6x; 90th 13.0x) | 7.9x | 25 Sep 2026 | About 70 companies (Clouded Judgement) | Clouded Judgement, Sep 2026 |
| Growing over 22% / 15–22% / under 15% | Median EV ÷ next-12-months revenue | 18.0x / 6.7x / 3.3x | — | 25 Sep 2026 | About 70 companies (Clouded Judgement) | Clouded Judgement, Sep 2026 |
| SaaS Capital Index | Market cap ÷ run-rate revenue | 4.2x | — | 30 Sep 2026 | 63 public B2B SaaS companies | SaaS Capital Index |
| Public software | EV ÷ implied ARR (revenue × 4) | 4.0x (top 10 median 19.8x) | — | 25 Sep 2026 | Meritech's public software set | Meritech, 2026 |
| SEG SaaS Index | EV ÷ trailing revenue | 3.2x (5.7x a year earlier) | — | Q2 2026 | 106 public B2B software companies | SEG, 2026 |
| Private SaaS companies | ||||||
| SaaS acquisitions | EV ÷ trailing revenue | 4.0x median (6.2x average) | — | Q2 2026 | Deals with disclosed multiples (Software Equity Group) | SEG, 2026 |
| Cloud 100 (top private cloud companies) | Valuation ÷ ARR | 20x average; AI companies 24x, others 19x | — | Jul 2025 | 100 companies (Bessemer) | Bessemer, 2025 |
| Cursor Series D | Post-money ÷ annualized revenue | Up to about 29x (our arithmetic) | — | Nov 2025 | Company announcement | Cursor, 2025 |
Fast growers rebounded first. ICONIQ: "high-growth companies rebounded to 9.2x NTM revenue multiples in Q2 2026 versus 2.7x for others." (ICONIQ, 2026)
SaaS Capital's model put private companies at 4.8x ARR (bootstrapped) and 5.3x (equity-backed) in January 2025, when its public index stood at 7.0x (SaaS Capital, 2025). Public multiples have fallen since.
Compiled Oct 2, 2026. Next review: Quarterly, with Clouded Judgement and the SaaS Capital Index. Left out: SaaS Capital's 2026 private valuation report (Form-gated; we use its public index and January 2025 model instead); ICONIQ tables (Its terms don't allow reproduction; we quote its sentences). Download these benchmarks as CSV.
Multiples in the wild: five public companies on one day
Enterprise value ÷ next-12-months revenue and consensus growth on 25 September 2026, from Clouded Judgement's comparables table. The growth-adjusted column is our arithmetic. (Clouded Judgement, Sep 2026)
| Company | EV ÷ NTM revenue | NTM revenue growth | NTM free cash flow margin | Growth-adjusted |
|---|---|---|---|---|
| Palantir | 45.4x | 63% | 57% | 0.72 |
| Datadog | 18.0x | 24% | 26% | 0.75 |
| Figma | 6.1x | 27% | 10% | 0.23 |
| Salesforce | 4.7x | 10% | 32% | 0.47 |
| Zoom | 3.7x | 4% | 36% | 0.93 |
Growth and profitability together drive the raw multiple: Palantir grows fastest and converts over half its revenue to cash. Adjusted for growth, the ranking changes: Figma, which SaaS Capital noted traded "above 50x ARR" after its 2025 IPO (SaaS Capital, 2025), looks cheapest, and slow-growing Zoom dearest.
Figures are analyst consensus estimates compiled by Clouded Judgement; Altimeter, its author's firm, may hold positions in these companies.
Revenue multiple vs ARR multiple, FCF multiple, growth-adjusted multiple and Rule of 40
| Metric | Answers | Ignores | Use it when | It misleads when |
|---|---|---|---|---|
| EV ÷ NTM revenue | Price of a dollar of next year's revenue | Profitability | Comparing public software companies | Margins differ widely |
| Valuation ÷ ARR | Price of a dollar of current recurring revenue | Cash and debt, if post-money is used | Pricing private rounds and acquisitions | Compared with public forward multiples |
| EV ÷ free cash flow | Price of a dollar of cash generated | Companies that don't yet generate cash | Valuing profitable, slower growers | Free cash flow is near zero |
| Growth-adjusted multiple | Price per point of growth | Profitability and durability of growth | Comparing companies growing at different rates | Growth is near zero |
| Rule of 40 | Growth rate plus profit margin | Price | Explaining why one company earns a higher multiple | Applied to early-stage startups |
Valuation = multiple × revenue. At 4.2x, $10M of revenue is worth $42M; at 18.0x, $180M (our arithmetic). Moving from low to high growth changes value far more than adding revenue does.
Common mistakes: how multiples get misquoted
- Mixing revenue bases. A multiple of forward revenue is lower than a multiple of trailing revenue for a growing company. Say which you used.
- Treating post-money as enterprise value. Post-money includes the cash just raised. Subtract it, and add debt, to compare with public enterprise values.
- Benchmarking against 2021. The public median was 20.8x in February 2021 and 4.2x in September 2026. Old comparables mislead.
- Using the median for an outlier. The top five public companies had a median of 39.7x. Unless your growth matches theirs, the median is the better anchor.
- Ignoring the private discount. Private companies lack liquidity and scale, so they usually price below public peers at the same growth.
- Ignoring profitability. Two companies at the same growth can trade far apart if one generates cash. Look at free cash flow multiples too.
How SaaS multiples have moved since 2014
| When | What happened | Source |
|---|---|---|
| Sep 2026 | The public median recovers to 4.2x, while the top five reach a median of 39.7x. | Clouded Judgement, Sep 2026 |
| Jun 2026 | The public median falls to 2.9x, the lowest weekly reading in 2026. | Clouded Judgement, Jun 2026 |
| Apr 2026 | SaaS Capital: "SaaS valuations hit decade-plus lows in Q1 2026 as markets priced in AI as an existential threat." | SaaS Capital, Apr 2026 |
| Feb 2026 | Jamin Ball: the median of 3.6x "is the lowest it’s been in the last 10+ years." | Clouded Judgement, Feb 2026 |
| Sep 2025 | The public median stands at 5.2x next-12-months revenue, and the top five at 22.4x. | Clouded Judgement, Sep 2025 |
| Sep 2025 | Bessemer: the average Cloud 100 multiple "fell for the third year to 20x", with AI companies at 24x. | Bessemer, 2025 |
| Aug 2025 | SaaS Capital describes a "New Normal" for 2023–2025, a trading range "bounded in the 6-8x ARR range". | SaaS Capital, Aug 2025 |
| Feb 2021 | Near the height of the 2021 boom, the public median stands at 20.8x next-12-months revenue and the top five at 61.5x. | Clouded Judgement, Feb 2021 |
| 2014–2019 | SaaS Capital's "Old Normal": multiples "were generally stable and ranged from 6x to 10x ARR". | SaaS Capital, Aug 2025 |
How it's regarded today
- Dispersion is the story. Randall Lucas of SaaS Capital calls it a "rich get richer" valuation environment; the top five public companies trade at nearly ten times the median.
- Revenue multiples, questioned but used. Jamin Ball still publishes them, while noting: "If you want a “top line” (revenue, gross profit, etc) vs a “bottom line” (earnings, FCF) valuation metric, you have to be operating in hyper / high growth" (Clouded Judgement, Feb 2026).
- Paying for growth. SaaS Capital's growth-adjusted multiple rose from 2022 to 2025: "Effectively, investors were paying more for a given level of growth."
- Clouded Judgement 9.25.26 - Own the Interaction Layer (Clouded Judgement, Sep 2026). Weekly public SaaS multiples, percentiles and growth groups, with company-level comparables.
- The SaaS Capital Index (SaaS Capital Index). A monthly index of public SaaS ARR multiples since 2013, with its method.
- SaaS Valuation Multiples: Understanding the New Normal (SaaS Capital, Aug 2025). How SaaS multiples moved through 'Old Normal', bubble and 'New Normal' regimes, and why private multiples sit lower.
What experts say about SaaS multiples
“The basket of existing cloud software companies may never get back to a median of 8x NTM rev (mark that statement in case we do, and this is the bottom!)”
“It’s a “rich get richer” valuation environment, and merely being a SaaS company is no longer a ticket to premium ARR multiples.”
“At the beginning of 2026, growing concern that AI posed an existential risk to the SaaS business model catalyzed a sharp re-rating lower.”
SaaS valuation multiples FAQ
What is a SaaS valuation multiple?
The ratio of a company's value to its revenue: enterprise value ÷ next year's revenue for public companies, or valuation ÷ ARR in private deals.
How do you calculate a revenue multiple?
Divide enterprise value (equity value plus debt minus cash) by revenue or ARR. $50M on $10M of ARR is 5x.
What is the average SaaS multiple in 2026?
Public SaaS companies had a median of 4.2x next-12-months revenue on 25 September 2026, and private acquisitions a median of 4.0x trailing revenue in Q2 2026.
Why are SaaS multiples so much lower than in 2021?
Higher interest rates, slower growth and, in 2026, fears that AI threatens the SaaS model. The public median fell from 20.8x to a low of 2.9x before recovering to 4.2x.
Are private SaaS companies valued like public ones?
Usually lower, all else equal, because they're smaller and harder to sell. Top private AI companies are the exception, raising at 20x or more.
What is the difference between an ARR multiple and a revenue multiple?
An ARR multiple divides by current recurring revenue; a revenue multiple usually by trailing or forward revenue, including non-recurring revenue. For a growing company they differ.
What is a growth-adjusted multiple?
The revenue multiple divided by the growth rate in percentage points. It lets you compare a 20x company growing 60% with a 5x company growing 10%.
Related metrics and guides
Sources
Every link was opened and checked. Archived copies guard against links that move or disappear.
Primary data
- The SaaS Capital Index. SaaS Capital, Data as of 30 Sep 2026. Index value read from its chart; the archived copy is an earlier month; the page's "7.0 times" text is out of date. Archived copy
- SaaS M&A and Public Market Report (2Q26 Quarterly SaaS Report). Software Equity Group, Q2 2026 edition. M&A adviser; deal multiples only where disclosed. Archived copy
- 2026 Annual SaaS Report. Software Equity Group, Jan 2026. Third-party copy of the PDF; the official one is form-gated. Archived copy
- The Cloud 100 Benchmarks Report 2025. Bessemer Venture Partners, 3 Sep 2025. Elite cohort; averages, not medians. Archived copy
- 2026 State of Scaling: The Great Sorting. ICONIQ Growth, Sep 2026. Quoted, not reproduced. Archived copy
- Past, Present, and Future. Cursor (Anysphere) company blog, 13 Nov 2025. Company announcement; revenue is annualized. Archived copy
Consultancy
- 2025 Private SaaS Company Valuations. SaaS Capital, 24 Jan 2025. Model-based estimates from a lender's survey. Archived copy
- SaaS Valuation Multiples: Understanding the New Normal. Randall Lucas (SaaS Capital), 6 Aug 2025. Archived copy
- Four early 2026 SaaS trends. Evan Tuck (SaaS Capital), 9 Apr 2026. Archived copy
Practitioner
- Clouded Judgement 9.25.26 - Own the Interaction Layer. Jamin Ball (Altimeter), 25 Sep 2026. Newsletter; consensus estimates; Altimeter trades in public securities; percentiles and company figures read from its tables.
- Clouded Judgement 6.26.26 - Time to Power. Jamin Ball (Altimeter), 26 Jun 2026. Newsletter; no archived copy found.
- Clouded Judgement 2.6.26 - Software Is Dead...Again...For Real this Time...Maybe?. Jamin Ball (Altimeter), 6 Feb 2026. Newsletter. Archived copy
- Clouded Judgement 9.26.25 - Easy Come, Easy Go?. Jamin Ball (Altimeter), 26 Sep 2025. Newsletter; no archived copy found.
- Clouded Judgement 2.12.21. Jamin Ball (Altimeter), 12 Feb 2021. Newsletter; no archived copy found.
- Meritech Software Pulse | 25-September-2026. Meritech, 29 Sep 2026. Newsletter compiling public filings; no archived copy found.
Changes to this page
- · Major · Page published. Benchmarks compiled 2 October 2026.
Cite this page
Dominique Bouillet, "SaaS valuation multiples: how they work and 2026 benchmarks", CX Cash, updated Oct 29, 2026, https://cxcash.com/metrics/saas-valuation-multiples
CX Cash builds software for founders and investors. This page is education, not investment advice. Third-party figures link to their source, and our own arithmetic and illustrative examples are labelled as such.