SaaS Valuation Multiples: 2015-2026 Historical Chart and Analysis
From 5x in 2015 to 18.6x at the 2021 peak, and back to 6.4x in Q1 2026. The complete story of SaaS multiple compression and the new normal.
Year-by-Year Public SaaS Median EV/Revenue
| Period | Median EV/Revenue | Market Context |
|---|---|---|
| 2015 | ~5x | SaaS sector establishing |
| 2016 | ~5.5x | Steady growth in cloud adoption |
| 2017 | ~6x | AWS/Azure maturation drives SaaS |
| 2018 | ~7x | Enterprise cloud migration accelerates |
| 2019 | ~8x | SaaS IPO boom (Zoom, Crowdstrike, Datadog) |
| 2020 | ~11x | COVID tailwinds; low rates; digital acceleration |
| 2021 Q1 | ~14x | Rate cut aftermath; SPAC boom |
| 2021 Q4 | 18.6x | PEAK: ZIRP, FOMO, speculative excess |
| 2022 Q1 | ~12x | Fed signals rate hikes; rapid compression begins |
| 2022 Q2 | ~9x | First 75bps rate hike; growth stocks sell off |
| 2022 Q4 | ~8x | 50% compression from peak; valuations reset |
| 2023 | ~6-7x | Stabilisation; focus on profitability |
| 2024 | ~5.5-7x | Sideways; AI premium bifurcation begins |
| 2025 | ~6-7x | Modest recovery; Rule of 40 dominates |
| Q1 2026 | 6.4x | Current median; AI-native bifurcation continues |
What Caused the 2021 Peak
The 18.6x median EV/Revenue in Q4 2021 required an extraordinary confluence of factors:
The Fed held rates at 0-0.25% from March 2020 to March 2022. Near-zero discount rates mathematically inflate the present value of future cash flows. A company expected to generate $1B in free cash flow in 10 years is worth vastly more when discounted at 0.5% vs 5%.
Remote work, e-commerce acceleration, and enterprise cloud migration created a genuine step-change in SaaS demand. Companies were growing at 80-150% YoY and investors extrapolated those rates forward.
Special Purpose Acquisition Companies (SPACs) created an alternative IPO path with weaker governance. At the peak, SPACs were acquiring SaaS companies at 30-50x EV/Revenue with limited scrutiny.
By mid-2021, every major VC fund was raising record growth rounds. Founders who raised at 30x ARR were immediately described as visionary. Competition for deals pushed valuation expectations upward in a self-reinforcing cycle.
What Caused the 2022-2024 Compression
The reversal was swift and severe. The Federal Reserve raised rates from 0.25% to 5.25% between March 2022 and July 2023, the fastest rate-hiking cycle in four decades. Three mechanisms drove the compression:
First, the DCF mechanism: every 1% increase in the risk-free rate reduces the present value of future cash flows. Growth companies with most of their value in years 5-10 of projections are most exposed. A company previously discounted at 3% now discounted at 8% loses 30-40% of its DCF value instantly.
Second, growth deceleration: the COVID pull-forward normalised. Companies that grew at 80-100% during 2020-2021 reverted to 20-40% growth. Not because their businesses broke, but because the baseline comparison became harder and the extraordinary tailwinds faded.
Third, the end of “growth at all costs”: Sequoia's “R.I.P. Good Times” memo in May 2022 crystallised a shift in investor expectations. Burn multiples above 2x were suddenly disqualifying. Companies that had raised at 30x ARR while burning aggressively faced a brutal re-rating.
2024-2026: Stabilisation and the New Normal
By 2024, SaaS multiples found a floor. The median stabilised at approximately 6-7x EV/Revenue, which is historically normal: it is roughly where multiples were in 2019 before the ZIRP-era inflation. The market has effectively repriced to a world where capital costs something.
The key 2024-2026 dynamic is bifurcation. AI-native SaaS companies -- those where AI is the core product rather than a feature -- are trading at 25-30x EV/Revenue, reminiscent of 2021 multiples. Traditional SaaS is at 5-7x. The spread between AI-native and traditional has widened significantly.
The Rule of 40 has become the dominant screening metric. Profitability is rewarded again. EBITDA-positive SaaS companies command 20-40% premiums over burning peers. No anticipated return to 2021 peaks without another ZIRP cycle, which is not expected as of Q1 2026 with rates still above 4%.