SQ should have a lower P/S than AYX because more than 50% of SQ’s revenue is low margin. Also, SQ’s high margin revenue has about 70% GM while AYX’s had >90% GM.
Chris, while that is true, SQ also has a much larger addressable market than AYX. SQ is deeply embedded in commerce as a whole, AYX is a niche enterprise service that most SMB has no need for. Of course no one can be sure what exactly the TAM is for each, if it’s $3 trillion for SQ and they can take 10% of the market (would take them a long time to get there) and $10 billion for AYX, you’d probably take SQ even if margin is lower.
You can also take this point and compare AYX and TWLO, why is TWLO valued so much higher than AYX on a P/S basis with its GM so low on a comparative basis?
Just trying to figure out why SQ is so cheap, that’s all