Success in the SaaS industry depends on more than just a strong product. For SaaS company leaders, benchmarking—the comparison of performance metrics across companies within the same industry—provides a way to understand their own company’s performance in the context of the broader industry and within their specific verticals. By enabling them to understand trends, set realistic goals, and measure their performance against their competitors, benchmarking can support leaders in charting a successful SaaS growth strategy and scaling their businesses, ultimately helping them prepare for future mergers and acquisitions.
Having a clear understanding of the broader software industry is one of several key insights to a successful transaction and a better SaaS valuation. In 2006, we created the SEG SaaS Index™, a basket of public SaaS companies, in order to better track the performance of the industry.
Now, we are excited to make the SEG SaaS Index™ available as an interactive tool that will enable software executives, private equity companies, venture capitalists, and others to view and sort key metrics for all companies in the Index and study historical trends. Users can access current information whenever and wherever they need it and can compare historical data since 2018.
NOTE FROM SEG: Users should be aware, of course, that while the public market affects the private market, the two do not move in lockstep. Look at these metrics as barometers of overall industry health, but for deeper insights into how these metrics influence your specific company, we suggest talking to an advisor.
In this post, we will go through the metrics available on the interactive SEG SaaS Index™ page and show you how you can use this as a tool to glean insights about your industry.
How to Analyze Your Business with the SEG SaaS Index™ Tool
Benchmarking holds up a mirror to SaaS CEOs, reflecting where they shine—and where there’s room for improvement. By allowing users to search and sort by company size, performance, multiple, product category, and a variety of metrics, it gives them a window into how they compare with similar companies that have gone public.
Here is a brief overview of the tool and what it offers:
Start with SaaS Multiples
The Daily EV/TTM Revenue multiples chart allows users to compare the SEG SaaS Index™ to other indices, including the NASDAQ, Dow Jones, and S&P 500, from January 2018 to the present.
Users can toggle the date filters to see how median SaaS multiples have changed over time and hover over the chart to compare median multiples at any point in time. This gives users a broad sense of the overall health of the market during any given period and the ability to see how the SaaS industry is performing within that context.
Track and Measure Performance
With the SaaS Index Stock Price Performance chart, users can see and compare changes in the median stock price performance of the SEG SaaS Index™ and compare it to the other indices. As with the Daily EV/TTM Revenue chart, users can hover over the chart to compare the percentage change at any time and can look at data going back through 2018. Again, this can provide useful historical context for how the software industry has performed relative to the broader markets.
Benchmark Your Company’s Metrics
The Companies section of the tool offers users access to key SaaS benchmarks. It lists all 122 (as of this writing) companies in the SEG SaaS Index™, along with stock price and ticker symbol.
Using these SaaS benchmarks, users can filter companies by any of almost a dozen metrics to see which companies are leading in various KPIs or had the most significant gains or losses in stock price. Users can also filter by product category to see how their own company is performing relative to public companies in similar markets.
Companies can be sorted by the following metrics:
- Stock Price
- Market Cap
- Enterprise Revenue
- TTM Revenue
- TTM gross margin
- TTM EBITDA
- Revenue growth
- YTD % Price Change
Check Index by Size
The SaaS Index by Size chart allows users to view the median stock price percentage change by size and toggle the date filters to compare performance over time. These metrics are evaluated on a TTM Revenue basis, and the information is, therefore, on the previous quarter’s end.
Size categories are determined as follows:
- Small: $0–$250M
- Medium: $250–$500
- Large: $500M-$1B
- Mega: $1B+
Get Familiar with the Percentage Changes
Using the SaaS Index Categories by Stock Price Percent Change, users can see how the stock prices of each of the 11 product categories are performing and how the categories stack up against each other. They can also click on the date filters to see how the categories compare over time.
Categories are defined as follows:
BI & Analytics
Business intelligence (BI) and analytics tools that help companies make informed, data-based decisions.
Communication & Collaboration
Solutions for building a collaborative work environment by breaking down communication inefficiencies between companies, employees, and others.
Dev Ops & IT Management
Tools used by programmers/developers to create, update, or maintain systems for software development. IT management provides accountability for hardware, software, and crucial information.
ERP & Supply Chain
This category combines ERP (enterprise resource planning) and supply chain companies. ERP solutions are back-end platforms that deliver an integrated suite of business applications, allowing a company to manage its business functions within a centralized, integrated system. They are used by virtually all enterprises. Supply chain management tools help manage the flow of goods, data, and finances related to a product and include logistics, fulfillment, and procurement.
Solutions for managing corporate finance, such as revenues, expenses, cash flows, etc. Used by accounting and finance departments.
Human Capital Management (HCM)
Providing tools that support human resources by streamlining the process of hiring the right people, training and managing workforces effectively, managing compensation and benefits, and optimizing productivity.
Tools that don’t fit in other categories, such as event management or eCommerce business solutions.
Sales & Marketing
Solutions that manage marketing processes across campaigns and feed that information across multiple channels. Sales-related tools help salespeople manage their pipeline more efficiently.
Tools that protect data and assets from exploitation or threats. Some security companies provide visibility into potential risks, making intelligence sharing easier.
Solutions focused on a specific industry or niche, such as PropTech, Government, Healthcare, or Education.
When you are ready, visit the SEG SaaS Index™ Tool to begin your research and company’s analysis.
Unlock Your Company’s Potential with Expert Guidance
Studying public SaaS company benchmarks can help businesses strategically position your company for success. Note that while this information creates a valuable context for the private markets, it is not an indication of how any individual private company will or should perform.
We offer expert guidance for identifying areas where your company can improve and strategic options to enhance its performance. If you are looking for a tailored understanding of how public market benchmarks can be applied to your business, we encourage you to reach out to us for a complimentary strategic assessment. Together, we can set you on the path to unlocking added value and securing a higher exit multiple. Click here to get started.
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