High Flying Public Software Companies as of Q1 2011

The following article is an excerpt from our Q1 2011 Software Industry Equity Report.  To download the entire complimentary report, visit our website:  https://softwareequity.com/research_quarterly_reports.aspx

While most of the listed companies comprising our three tracking indices saw improved EV/Revenue multiples year-over-year, ten public software, SaaS and Internet companies excelled at boosting their market valuations in 1Q11 (Figure 6).  Overall, these overachievers reported a TTM median revenue growth rate of 43.1% and TTM median EBITDA margin of 24.7%.

The ultimate overachiever was Youku, China’s leader in online video.  Youku’s median 1Q11 EV/Revenue multiple was 68.7x, assisted by a 286.3% surge in stock price since its 4Q10 IPO.  It’s clear investors are enamored with Youku’s remarkable YoY revenue growth of 152%, which came at the cost of a negative EBITDA margin of -17.7%.  Youku narrowly beat out Qihoo, another Chinese company, for top honors on the high flyer list.  All told, five of the ten EV/Revenue high flyers are headquartered in China: Youku, Qihoo, Baidui, Ctrip and SINA.  The other five rounding out the list include VMWare, Rovi Corporation, Cornerstone OnDemand, Mercadolibre and SuccessFactors.

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