SaaS Valuations Post Q1

This article is worth a read.

SNIP…

These charts tell the story of a “flight to quality” of dollars from the most negatively impacted public SaaS companies to the less impacted and positively impacted companies. Naturally, the companies that have seen the most value appreciation are those which the Street believes will be positively impacted long-term due to COVID (some of which I mentioned before, like Fastly and Datadog*). Evidence of this is an increase in the 2021 revenue estimates from pre-COVID to today. More interesting though, is that companies that have seen only a very small increase in 2021 revenue estimates or even a small decline in estimates (like Bill.com or Shopify) have also, in most cases, seen a significant increase in share prices in multiples. This is despite the fact that the majority of these companies withdrew or gave tepid outlooks in their Q1 earnings calls. The point is: investors are flocking to companies that they believe are positioned to benefit from the impact of COVID or are largely insulated from those impacts over the long-term, driving up share prices and multiples.

https://www.meritechcapital.com/blog/q1-saas-earnings-and-va…

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