SaaS Valuation

April 01, 2024

by an intermediary in New York, NY, USA

Hi all,

I have a SaaS B2B, ARR $800k, has grown 300% in 1 year, limited competition in a niche Market, 80% profit margins. Wondering what would be the valuation on this, was thinking of 8.5x of the ARR. How off am I? Would love to hear your thoughts or references.

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Reply by a searcher
from Columbia University in Fairfax, VA, USA

It's difficult to make a call on this without more detail. At a minimum, it'd be important to understand acquisition costs of the customer base that makes up the $800k (ideally, broken out by channel if there's paid spend) and retention data (as limited as it might be depending on whether your customers renew monthly or annually).

Also - broadly speaking, what space is this in? Assuming CAC to LTV is solid, and most of that growth has happened organically, and it's in a growing sector... it could command a higher ARR multiple.

Reply by an intermediary
in Toronto, ON, Canada

For 8.5X ARR you'd probably have to show more than one YoY high growth - the other question that immediately popped into my mind when I saw the 300% growth (congrats, on that - huge) - is the customer concentration.

Was that one or two big contracts / clients? Or are you onto something and you're signing up customers all over the place.

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