SaaS at 3x Revenue – Xactly Follow-up

As a follow-up to last week’s post Notes from the Xactly S-1 IPO Filing, it’s useful to see how things played out for a newly public Software-as-a-Service (SaaS) company. With so much media and analysis around SaaS companies trading at large multiples (e.g. 8x or greater revenue), Xactly paints a much more realistic picture of a cloud computing company growing at a modest pace.

Here are a few notes from the outcome of the Xactly IPO (NYSE:XTLY):

  • Market cap: $241M
  • Last quarter’s revenue annualized: $71M (last quarter’s revenue times four)
  • $241M / $71M = 3.3x (ignoring cash on hand, liabilities, etc)
  • Q1 2014 to Q1 2015 quarterly revenue growth: 16%

So, for a SaaS company growing less than 20% per year, the revenue multiple here is roughly in the 3x range. This is a big difference from the huge premiums much faster growing companies earn (see Quantifying the SaaS Growth Rate Multiplier). For Xactly, it’ll be interesting to see if they can use the new cash on their balance sheet to increase their growth rate and command a much higher premium.

What else? What are some more thoughts on SaaS at 3x revenue?

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