Valuation multiples on listed companies in the Software Applications sector grow by 56%

Integral service around a transaction
BY : adminMarch Fri, 2021

Analysis of the main variables

Revenue growth

Despite the current Covid-19 situation, most listed companies have continued with double-digit growth. For example, the average has reached 20% and the median 19%. In addition, more than 60% have grown above 15%.

valuation by multiples
Revenue growth

According to the Top Revenue Growth, Cloudera is the one showing the highest increase, by 70%. Cloudera, is a software company based in the US that provides a software platform for data engineering and warehousing, machine learning and analytics that runs in the cloud or on-premises.

cloudera logo


graph gross margin

Gross margin shows an overall high level reaching an average of 70%. However, most EBITDA margins (>50% of the companies) are negative, with an average of -1% and a median of -5%.

graph gross margin 2

AppFolio logo

In terms of EBITDA Margin Top, AppFolio shows the largest increase, up 73%. AppFolio offers web-based property management software for residential property managers to market, manage and grow their businesses.

Valuation with multiples analysis

EV/revenue vs. EV/EBITDA

In general, the EV/EBITDA multiple is usually more meaningful than the EV/revenue multiple because it shows less dispersion. In this case, EV/EBITDA cannot be used as a benchmark, as more than 50% of companies have negative EBITDA. The EV/revenue multiple is extremely high, with a mean of 14 times and a median of 13 times.

Valuation with multiples analysis
EV/Revenues vs. EV/EBITDA chart

appian logo

According to the Top EV/Rev Multiple, Appian Appian is a low-code automation platform for building enterprise software applications faster. With Appian, you get the speed of low-code development with the power of intelligent automation in a unified and trusted cloud platform.

Annual valuation performance by multiples 2020 vs 2019

As we can see in the graph, valuation multiples have increased over the last year at an incredible rate, the average has increased by 56% while the maximum has reached a difference of 116%. There are no major differences between the lower values.

As for the median, it has increased by more than 48% and income growth has stabilised at its highest and lowest values. However, the median and average growth have declined markedly.

Annual valuation performance by multiples 2020 vs 2019
graph Annual Evolution of the valuation multiples 2020 vs 2019

Final Conclusions

REVENUE GROWTHThe average growth has declined significantly year-on-year possibly (31% ->19% on average) due to the current market situation, although companies continue to grow at very healthy rates.

BENEFITMost of the companies show a high gross margin (69%) but EBITDA margins show negative values in more than 50% of the companies analysed, which leads to the hypothesis that these companies are in a race to consolidate their market share by combining high growth with negative margins.

EV/ INCOME vs. EV/ EBITDAEv to Revenue multiples show extremely high values (52x). Ev to EBITDA multiples are not consistent due to widespread negative EBITDA.

EV to EVOLUTION OF REVENUEThe mean of the multiples has increased considerably, from 9.2 to 14.2, as has the median, from 8.8 to 13.1.


Listed companies Analysis

Data for Analysis

This table shows the valuation multiples of several companies in the Software Applications sector.
graph Data for Analysis
graph 2 Data for Analysis

Source: Gurufocus 21/02/23

Note: Valuation multiples below 0.0 and above 75.0 have been considered non-significant and the EV/EBITDA statistics above have not been taken into account, they are indicative only.

The M&A Professionals

Meet our services



Do you want to be up to date?


Our diferentiation

Market Research Technology
Our team of market analysis specialists is continuously analyzing the investments of the most active markets in the industry in order to unceasingly contribute ideas of the current market situation and identify the most relevant trends for senior management. We integrate the most relevant sources of information which allows us to discover the most interesting companies for venture capital and similarly helps us to identify the investors with the highest probability of involvement in an M&A process to ensure the success of our sell-side operations.

The reports and deductions of our advisors provide a broad view of the sector, both geographically and from the complementary or adjacent markets perspective.
Technology Data Analytics
for M&A
Advanced data anlytics is a weapon". Intelfin is an artificial intelligence tool we use for investing and creating value in SMEs through competitive analytics and the enterprise environment.

IntelFin consists of a cognitive system, which, through the application of advanced analytical technologies, facilitates the automation of investment and financing decisions in the field of non-listed companies and especially SMEs in high-growth sectors.

The information related to these companies is characterized by their lack of transparency and heterogeneity; thus, it is necessary to develop an advanced analysis which is as much predictive as prescriptive and is developed in a natural language custom, suitable to obtain greater clarity and knowledge of the investment scope.

The IntelFin system focuses especially on analyzing the variables that define and influence the competitive environment of a sector and the positioning of a company, analyzing their influence on future value creation. Therefore, IntelFin supports strategic decision-making to senior management by resolving questions such as:

¿What are my competitors' priorities, strategies and expansion plans? Who's my competition? Which competitor is most likely to grow at a higher rate?
Which areas of activity/business models will receive the most investment? Which sectors are most attractive to investors?
Which companies are going to experience the most growth in the near future? Which companies are most likely to receive investment or be acquired?
Training Methodology
We have developed training programs in an innovative set-up which guarantees our teams the acquisition of technical competences both in the field of corporate finance and in the field of psychology, that is much needed when it comes to negotiation processes.

We have a culture of continuous improvement of our processes, closely related to the use of information systems that allow the enhancement of internal communication between our teams, as well as external communication with our customers. Hence, we extend best practices identified internally in an efficient and rapid manner among our members.

Are you one of those who prefer to be well informed when making decisions?