2008 recession - performance of Salesforce

Today morning i got a blog from meritech capital about current valuation multiple compression in SAAS companies.
Link here,

https://www.meritechcapital.com/blog/2022-saas-crash

From the analysis following information i found very useful,

a. Before recession
Salesforce - Peak multiple was 7.5xNTM before recession(end of 2007) and market cap was around 8.5B and the company was growing at 50% YoY with 1B ARR. And similarly the employee head count were also growing at 40% YoY.

b. During recession
Salesforce - low NTM multiple was 2.5xNTM and market cap was around 2.7B. Revenue growth slowly dropped from 50% to 20% from 2008 Q1 to 2010 Q1 before acceleration is seen in revenue.
Similarly employee head count dropped from 40% to 11% from 2008 Q1 to 2010 Q1.

Now after all the 2008 recession, 2018 QT by FED,2020 COVID, 2022 decline. Current Salesforce market cap is 165B(Which is 60x from 2008 recession low of 2.7B) as of this writing and LTM Revenue is 26B.
CRM had a stock split in 2013 which is 4:1 split.

One thing i noticed, during recession CRM revenue growth dropped significantly(valuation also compressed), but currently from the guidance of NET,DDOG could not see growth deceleration in revenue guidance. If we hit into recession maybe next year(no one knows) need to see the guidance of our SAAS companies.

Following are the position i own and am happy to add on any crash or recession because i see the companies i invest as next CRM,

Snow - 33%
DDOG - 27%
ZS - 11%
NET - 10%
CRWD - 10%
S - 9%

Even though snow is trading at high multiple compared to other SAAS companies. Snow will be the first among the companies to reach 10B ARR maybe by 2027.

Thanks,
Jose.

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