SaaS valuations jump despite little change in growth outlook

The average SaaS company enterprise value multiple of 2025 estimated revenue was 6.5 at the end of the June quarter, up from 5.4 last quarter. For 2026 estimated revenue, the average multiple was 5.6, up from 4.7 last quarter. Analysts now expect average revenue growth of 13.1% in 2025, up from 12.4% last quarter, and 12.5% in 2026, down from 12.9% last quarter.

Our SaaS universe stocks gained 13.0% on average in the June quarter, outperforming the S&P 500’s 10.6% gain and making up for some of the underperformance in the March quarter. Performance continued to be very stock specific with the share prices of 15 companies in our universe of 91 gaining more than 30% and 22 declining. The data visibility and cybersecurity groups led for the quarter, with data visibility stocks gaining 29.7% on average and cybersecurity stocks gaining 27.1% on average. The average gain in four sectors was only 5% to 6%: vertical SaaS, IoT, future-of-work, and e-commerce.

Correlations between enterprise value multiples of estimated forward revenue and revenue growth rates were similar to recent quarters’ solid levels. For 2025 estimated revenue, the correlation was unchanged at 0.60. The correlation for 2026 increased to 0.63 from 0.60 last quarter.

Our SaaS universe stocks gained 13.0% on average in the June quarter, outperforming the S&P 500’s 10.6% gain and basically getting back to flat for 2025 year-to-date. Performance varied substantially by company, with 15 companies appreciating more than 30% in the June quarter and 22 stocks declining. The data visibility group led with a 29.7% average gain driven in part by Couchbase’s (BASE) 54.8% rise based on an acquisition offer. The cybersecurity group followed closely behind with a 27.1% average gain after leading last quarter. The vertical SaaS group lagged, gaining only 5.0%. However, the average gain in four other sectors was only 5% to 6%: vertical SaaS, IoT, future-of-work, and e-commerce, and all underperformed the overall market.

The average SaaS company enterprise value multiple of 2025 estimated revenue was 6.5 at the end of the June quarter, up from 5.4 last quarter. For 2026 estimated revenue, the average multiple was 5.6, up from 4.7. Revenue is expected to increase 13.1% on average in 2025 and 12.5% in 2026 versus expectations of 12.4% and 12.9% last quarter.

We added two companies and removed three from our SaaS universe, bringing the total to 91. We removed Dun and Bradstreet (DNB), Enfusion (ENFN) and Paycor (PYCR) due to their acquisitions announced in the March quarter. We added SailPoint (SAIL), which returned to the public markets in March, and Rubrik, which held its initial public offering in April 2024. Both are cybersecurity companies. SailPoint, which was publicly traded prior to its acquisition by Thoma Bravo, provides enterprise identity security software. Rubrik provides software for data protection, data threat analytics, data security posture, and cyber recovery.