On July 16, 2025, we hosted a live webinar titled “SaaS Valuations H1 2025 Update”. The webinar was presented by Marcin Majewski, Managing Director and Filip Drazdou, M&A Director.
You can now watch the full webinar replay below. If you would like to download the presentation material used during the session, you can easily do so by clicking the download report button on the left (if you are using a computer) or by scrolling at the very end (if you’re using a phone).
Marcin Majewski:
It’s the middle of July, and I really appreciate that you’re here with us today. It shows that you’re among the most dedicated followers of our research, eager to stay informed about what’s happening in the industry.
For those who haven’t joined our previous webinars, I’m Marcin Majewski, the founder and CEO of Aventus Advisors. I’m joined today by Filip.
Filip Drazdou:
Hi, I’m Filip Drazdou, Managing Director at Aventus Advisors. It’s great to see you all.
Marcin Majewski:
As always, we’re here to share our latest insights and help you make better decisions – whether it’s about your investments, exit strategies, or, more specifically, SaaS acquisitions and fast exits.
Even though it’s summer, it’s still an exciting time in the financial markets. There’s a lot happening, and today we’ll unpack what’s been going on this year and what we can expect moving forward.
So, let’s dive right in.
Filip Drazdou:
Let’s dive in.
Marcin Majewski:
The theme of today’s discussion is “TACO,” which helps explain many of the recent swings in the financial markets.
For those unfamiliar with the term, TACO stands for “Trump Always Chickens Out.” Over time, we may grow immune to the market reactions, but the fact remains – Trump still has the capacity to move markets.
Back in our April webinar for SaaS companies, founders, and investors, we promised to revisit the topic of SaaS valuations 90 days after what we called Liberation Day.
Marcin Majewski:
For those who might not remember what happened back in April, there was an announcement of reciprocal tariffs in the U.S. on essentially the rest of the world.
That announcement was quickly suspended with a 90-day deadline, during which the U.S. was supposed to close trade deals with other countries. But over those 90 days, that really didn’t happen.
Trump didn’t follow through with the reciprocal tariffs, at least not to the extent he promised. Very few deals were made, with the most notable being the one with the UK and a sort of ceasefire with China. But beyond that, everything is still pending.
I don’t think we’ll see the full implementation of what was announced back in April anytime soon. The dust has largely settled, and the markets have discounted much of the tariff talk.
So today, we’re here to explain how all this has translated into SaaS valuations. And honestly, we were quite surprised by what we saw.
Filip, let’s put some perspective on it.
Filip Drazdou:
Yes, let’s zoom out for a moment.
The markets dipped earlier this year but are now back at all-time highs. So we wanted to see how SaaS valuations evolved in that context.
Looking at the big picture – a 10-year view: recent fluctuations are relatively minor. There’s been a bit of movement up and down, but nothing dramatic compared to the trends we saw between 2016 and 2020, which was a period of rapid growth in multiples.
During COVID, there was a massive spike in valuations, followed by a steep decline. And over the past three years, we’ve seen a slow, steady downward trend. Political headlines haven’t really had a huge impact on headline revenue multiples.
For example, if we look at our basket of the largest SaaS companies, those with market caps above $1 billion, listed in the U.S., like Adobe, Salesforce, and Zoom, the median multiple is still around 6x revenue.
If we broaden that view to a much larger basket of 200 SaaS firms globally, the median multiple is closer to 4x revenue.
So, from a big-picture perspective, the changes aren’t dramatic. But if we zoom in on the past 12 months, we see more volatility. Multiples have swung between 5x and 8x during different periods.
We essentially ended up in July at about the same levels as a year ago. In the meantime, there were phases of optimism, like when Trump was elected and U.S. markets rallied as some uncertainty lifted.
During that period, SaaS companies traded as high as 7–8x revenue. Then, as trade war rumors started to feel more real, valuations declined. There was a sharp drop on what we called Liberation Day, followed by a reversal.
Now, we’re back to slightly lower numbers than before Liberation Day – around 6x for the largest U.S.-listed SaaS companies.
What’s interesting is that global SaaS companies actually gained a bit of ground. Before, they traded around 3.4x revenue, and now they’re closer to 4x. So European and other international SaaS firms benefited slightly, closing the valuation gap with their U.S. peers.
Marcin Majewski:
Yes, and a lot of that has to do with exchange rates.
If you’re a European investor holding U.S. equities, particularly SaaS companies, you’ve actually been slightly worse off due to exchange rate movements. On the other hand, if you’re a U.S. investor holding European software companies, you’ve gained quite a bit thanks to the currency shifts in the meantime.
I also noticed one of our attendees raised their hand. If you have questions, please type them into the Q&A section. We’ll go through all questions after we finish the slides. We really value your engagement, so feel free to share anything you’d like us to address.
Filip Drazdou:
Okay, moving forward, let’s talk about U.S. versus non-U.S. SaaS companies, which we’ve already touched on a bit.
Marcin Majewski:
Yes, this is an interesting dynamic. After Donald Trump’s election, there was a wave of optimism in the U.S. stock market, and U.S. valuations, in particular, rose significantly. That trend lasted until February.
After what we called Liberation Day, the trend reversed. But even with that correction, there’s still a significant premium, around 43% for U.S.-listed companies compared to their peers in other countries.
A lot of that has to do with the size premium.
Filip Drazdou:
Exactly.
Marcin Majewski:
We tend to see more profitable companies in other countries, but the U.S. market’s size is a huge advantage. If you need to deploy large sums of money, there’s simply no bigger and more liquid market than the U.S.
If you’re purely looking for value, there are probably better opportunities elsewhere. But when it comes to exits and finding buyers, there’s no better buyer than a U.S. corporation. They have the firepower, and they benefit from geographical arbitrage when acquiring international companies.
So this dynamic is still very much in play, and I think it will continue for years to come.
Filip Drazdou:
Yes, I agree. The U.S. premium is here to stay. It’s the largest software market in the world and also the most liquid stock market with the widest investor exposure.
Even if the premium narrows slightly, it’s unlikely to disappear. At the peak during COVID, the U.S. premium was well above 100%. Now it’s smaller, but I believe it’s a long-term structural factor.
Marcin Majewski:
Right, so let’s move on to the next topic.
Filip Drazdou:
Growth rates. This is one of the most critical KPIs for any SaaS company.
The recent underperformance and decline in valuation multiples really stems from slowing growth rates.
What we’re seeing is that SaaS growth has been gradually decelerating for quite some time. Ten years ago, the top-performing companies were growing at 30–35% annually. But as the industry matures, growth naturally slows, even though profitability may improve.
There was one major exception during COVID when growth rates spiked by more than 10 percentage points in a single quarter. Everyone was suddenly investing in software – Zoom, project management tools, collaboration platforms to support remote work.
That temporary surge helped sustain high valuation multiples. It wasn’t just about low interest rates and helicopter money; the fundamentals actually improved significantly for a while. Revenue growth jumped from around 22% back up to almost 35%. And if you believe that kind of growth would continue, it justifies paying high revenue multiples.
But now, in hindsight, we see it was a one-off event. Growth has resumed its downward trajectory. In fact, in the most recent quarter we looked at, Q1, the median revenue growth rate for the 70 largest SaaS companies dropped by nearly 2 percentage points in just one quarter, which is quite a lot.
Marcin Majewski:
Bring it on.
Filip Drazdou:
The reality is that new revenue simply isn’t coming in. What we’re seeing is that many SaaS companies are struggling to sign new customers. Even if their net revenue retention remains solid, the difficulty in acquiring new logos means their overall growth rates are declining.
And this is where the story of high revenue multiples for fast-growing but unprofitable companies starts to break down.
If you’re a SaaS company growing only 10% annually and still not profitable, the question becomes: why would anyone pay a high revenue multiple for that? At that point, you’re starting to look more like a traditional business with limited growth prospects.
For example, imagine a SaaS company doing $10 million in revenue but generating only $1 million in EBITDA. Valuing that business at 3–5x revenue – that’s $30–50 million. It seems excessive when it’s barely profitable and not growing meaningfully. From a common-sense perspective, it just doesn’t add up.
So, taking into account the slowdown in growth but still seeing relatively healthy revenue multiples, I’d say the current environment remains quite good for founders and sellers. It could have been much worse, we could already be in a world where SaaS companies are valued strictly on EBITDA multiples. And in a few years, as the industry matures further, we probably will see more EBITDA-based valuation approaches.
But for now, even with median revenue growth around 10%, which is quite conservative, we’re still seeing revenue multiples being applied. That shows the market is still relatively favorable.
Marcin Majewski:
I have a question.
Looking at this green line on the chart and the little “hockey stick” recovery forming here – are we really buying that? Do we actually see any reason why the decline in growth rates would stop?
It looks optimistic, suggesting there’s some bounce back. But is it for real, or is it just an artifact, maybe a bias from analysts who are overly optimistic about growth?
Filip Drazdou:
I’d say it’s partly an artifact of how global stock markets operate.
What typically happens is that for the next quarter, expectations are set quite low. That allows companies to “beat” estimates and deliver an earnings surprise – or in this case, a revenue surprise. Then they guide optimistically for the latter part of the year, saying growth will recover further down the road.
But realistically, I think we’ll continue to see a bit more decline. By the end of the year, I’d expect growth rates to settle around 10%, maybe even a bit lower.
Marcin Majewski:
Hmm. So if the consensus is that growth will recover but we don’t expect that to happen, then valuations will probably continue trending downward. Eventually, when people realize there’s less growth than expected, the repricing will follow.
Filip Drazdou:
Yes. Another interesting angle here is the impact of AI on SaaS companies.
There’s been a lot of talk about AI being a positive driver for SaaS – new revenue streams, AI-powered pricing plans, token-based models, and so on. Many companies have introduced AI add-ons or AI-driven upsells.
But we’re not really seeing that reflected in the big-picture data.
Compare it to COVID: that was a clear one-off event with a massive impact. Growth rates jumped by over 10 percentage points in a single quarter. With AI, we’re not seeing anything like that.
So far, AI hasn’t meaningfully moved the needle in the way some people were expecting. And we’ll dive a bit deeper into whether SaaS companies are truly benefiting from AI or not – later in this session.
Let me just wrap up this part. On the right of the slide, we’ve plotted the enterprise value-to-revenue-to-growth ratio, which shows where we currently stand…
Marcin Majewski:
This part is quite exciting. Filip, can you explain this concept in more detail? It’s a new term for most people.
Filip Drazdou:
Sure. What we’re analyzing here is how much of a revenue multiple you’re effectively paying for each unit of growth.
If a company has a very low growth rate but still trades at a high EV-to-revenue multiple, that ratio is high, meaning it’s potentially overvalued. Conversely, if a company has strong growth but lower multiples, the ratio is lower, suggesting it’s undervalued.
So in simple terms, the lower this ratio, the more attractive the valuation. The higher it is, the more stretched the pricing looks.
Looking back over the past few years, even accounting for the 2021 bubble, we’re still relatively high on this measure. Investors are still paying significant premiums for growth, even though actual growth rates have come down.
Marcin Majewski:
Right. And to give some context, the main driver of SaaS valuations so far has been growth – not EBITDA.
One of our attendees asked about this, so we wanted to find an equivalent of the PEG ratio, which is Price-to-Earnings-to-Growth, a very important KPI for more mature or traditional stocks.
But for SaaS, many companies are still unprofitable, so the PEG ratio doesn’t apply. Instead, we came up with this EV-to-revenue-to-growth metric as a more meaningful way to look at valuations for the sector.
And what we’re seeing now is that prices still look quite high, exorbitant, really, because we’re not far off the COVID-era valuation peaks.
Filip Drazdou:
Exactly. And if you look at the median growth rate on the left side of the chart, remember that half of the companies are actually growing below that number. Some are only growing 5–10% annually, yet they still command fairly strong revenue multiples.
Marcin Majewski:
So the big question – is software still eating the world?
Filip Drazdou:
Well, if you look at the overall revenue, this is still a massive market. I don’t recall the exact figure offhand, but it’s in the trillions of dollars globally.
The challenge now is that, in many ways, software has already “eaten” the world. There’s not much left to disrupt in the same way as the past decade.
Marcin Majewski:
(Laughing) Maybe it’s already eaten everything.
Filip Drazdou:
Yeah, but now someone or something else is starting to eat the world. And that’s AI.
Marcin Majewski:
Let’s talk about that.
Filip Drazdou:
Right. We looked at the relationship between AI and SaaS – two of the hottest topics right now.
One of them, SaaS, is starting to feel a bit “boring” to investors. The other, AI, is the new shiny thing everyone’s excited about.
On this chart, we plotted several stock market indices. In purple, you see the SaaS index; in black, the AI index; and in blue and red, the S&P 500 and Nasdaq for reference.
For the AI index, we compiled companies across the AI value chain – data center builders, electrical utilities, component makers, HVAC suppliers, and so on. It’s an equal-weighted index, so it’s not just Nvidia driving the performance.
What’s really striking here is the huge divergence between SaaS and AI companies. Many AI-linked firms aren’t even traditional software companies, but they’ve massively outperformed.
Investors are clearly shifting their focus toward AI. Meanwhile, SaaS companies have underperforme – they’ve been largely flat over the past couple of years while the AI index has skyrocketed, regaining all-time highs after a brief dip.
Marcin Majewski:
Yes, like putting on fresh lipstick for a new hype cycle.
Filip Drazdou:
Exactly. And one more interesting observation: when we looked at the so-called “Deep Seek” event when there was panic over potential disruptions in AI – we saw huge stock price declines for companies like Nvidia, Broadcom, and other hardware and infrastructure players.
But SaaS companies barely moved that day.
This shows that the market doesn’t really view SaaS as a direct beneficiary of AI. Investors see a massive boom in AI itself, but they don’t believe SaaS companies are synonymous with AI.
Even though SaaS executives love to say “AI” dozens of times on earnings calls, it’s not convincing investors anymore. SaaS companies are still about selling software subscriptions. AI is something very different, and the market is treating it that way.
Marcin Majewski:
So who really benefits from AI? Which layer of the stack is capturing the most value?
Marcin Majewski:
We mentioned this in our previous webinar on AI valuations: the real winners right now are the “picks and shovels” players – the entire supply chain supporting the AI boom.
These are companies building data centers, upgrading electrical grids, providing cooling systems, and other infrastructure. They’re making a lot of money while the AI gold rush lasts. And compared to being on the bleeding edge of AI research, these businesses are much less risky.
Someone has to supply the hardware, the energy, the air conditioning. That’s where a lot of the immediate value is being captured.
On the other hand, the front-end AI companies face enormous risks. Take Perplexity, for example. There’s growing doubt about the long-term viability of its business model, especially now with OpenAI dominating and Google responding aggressively. Is there really room for Perplexity in this market? It’s unclear.
So, interestingly, AI is reinvigorating old-school industries – power grids, HVAC, data center construction. It’s surprising how vast the reach of AI has become and how much it’s reshaping the global economy.
But for SaaS, the picture isn’t so bright. SaaS is under real threat from AI. Investor attention has shifted, but more importantly, customer attention has shifted too. When enterprises are experimenting with AI, they’re not spending that time tinkering with ERP systems or traditional SaaS tools.
We’re already seeing disruption in areas like business intelligence. Why build complex reports or dashboards when you can just query a chat interface and get the answer? That kind of change will disrupt many enterprise systems.
So no, I don’t think this is a great time for the SaaS industry.
Filip Drazdou:
And to clarify, in our SaaS index we only track pure-play SaaS companies. We don’t include Microsoft, Google, or Amazon’s AWS.
Those big tech players have massive cloud businesses, and they are indeed benefiting from AI. They’re also part of the Nasdaq, which is why they’ve performed relatively well. But for pure SaaS companies like Salesforce or Adobe, we haven’t seen big AI-driven wins.
They don’t own foundational large language models. Instead, they’re just layering on AI features built on someone else’s models. That’s not the same as capturing real AI value.
Filip Drazdou:
Okay, let’s shift to profitability and margins.
Marcin Majewski:
YThis chart is remarkable. Because there were already two previous “attempts” by SaaS companies to break even – one around 2019 and another in 2021.
But they finally managed to reach profitability as a sector only in 2024, which is roughly 25 years after Salesforce was founded and effectively started the SaaS revolution.
Looking at this chart, it’s clear we shouldn’t expect very high profitability from SaaS companies anytime soon. The margins seem to be peaking, and that’s worrying.
Investor patience is running out. We discussed this yesterday in the context of Semrush, the SEO analytics company.
Filip Drazdou:
Yes.
Marcin Majewski:
Semrush turned a profit for the first time this year, after roughly 20 years in business.
But at the same time, their entire industry is being disrupted by AI. SEO as we know it is being reinvented. If AI changes how people search, SEO loses much of its relevance.
So even though they’ve finally become profitable, the market doesn’t believe the profits will last. Investors are starting to lose faith that many of these companies will ever achieve sustainable profitability especially with AI as an existential threat.
I do hope they manage to make more money in the future, but realistically, any increases in profitability will be slow. Don’t expect easy revenue growth from here.
In fact, for our next webinar, I think we should start looking more closely at EBITDA multiples. Historically, they weren’t relevant for SaaS because growth was the focus. But going forward, EBITDA is going to matter much more.
Filip Drazdou:
Exactly. Some of the very largest players like Salesforce, Adobe, Intuit are profitable, with EBITDA margins above 30%.
But those are the exceptions. For most SaaS companies, it hasn’t been that easy. As the years go by, they’re still hovering around breakeven or maybe single-digit margins. They have to keep pouring money into R&D and into sales and marketing just to compete.
It’s also become much harder to acquire new customers. And you still need that “fast growth company” narrative to justify the valuation.
So they’re caught in the middle: they’re no longer high-growth, but they’re not highly profitable either. It’s unclear if SaaS is now a mature, profitable industry or still a growth industry.
Filip Drazdou:
Okay, so on the next slide, we’ll talk about the outlook.
Where do we go from here, Marcin? What’s your bullish case from here?
Marcin Majewski:
We agreed I would be the bullish one, and I’ll stick to it – but with some caveats. I’d call it selectively bullish.
Right now, overall sentiment toward SaaS isn’t great. But that means there could be a few hidden gems companies flying under the radar, undervalued while everyone is chasing the AI hype.
I also believe a handful of companies, especially the so-called “Magnificent Seven,” will successfully ride the AI wave and make a lot of money from it. But those aren’t in our pure SaaS peer group, because SaaS is only a small part of their revenue mix.
Still, if you look closely, you’ll find opportunities. There will be SaaS companies that reinvent themselves with AI. But you’ll have to be very strategic and very selective. There will be clear winners, and probably a lot of losers.
Unfortunately, I expect most SaaS companies won’t manage to fully reinvent themselves for the AI era. At best, they’ll become cash cows with sticky products. So yes, that’s my bullish case, but it comes with many reservations.
Filip Drazdou:
Yes, and the key is investor sentiment. Sometimes you have to “be greedy when others are fearful.” As you said, there may be a handful of undervalued SaaS companies worth buying now.
But overall, for the SaaS market as a whole, the outlook is more bearish. Growth rates keep slowing, and that’s always been the main story driving SaaS valuations. They were valued on revenue multiples precisely because they were fast-growth companies. Profitability didn’t matter because it was about investing for future growth.
But if growth slows to 5–10%, that story collapses. Those investments stop looking valuable.
One reason for this slowdown is AI. Big enterprise clients are shifting their budgets and attention toward AI initiatives. Capex that used to go to ERP rollouts or new SaaS tools is now being redirected toward large language models, premium ChatGPT subscriptions, and custom AI projects.
We’re even seeing IT services firms benefit from this shift. OpenAI itself is now offering consulting services to help large enterprises implement AI solutions directly. That could bypass the SaaS layer entirely, as companies integrate AI straight into their internal systems.
Another factor is simple investor fatigue. SaaS has been the hot sector for over a decade. Now, investors are chasing the next big thing – AI, data centers, or early-stage startups. That’s where the excitement (and the outsized returns) are. SaaS is starting to feel “boring,” closer to the market average.
So unfortunately, we’re more bearish than bullish on SaaS as a whole.
Filip Drazdou:
One possible positive angle is global SaaS rebalancing. There are overlooked markets, countries with low SaaS penetration that still have room to grow. Adoption varies widely by geography. In some emerging markets, SaaS is just getting started.
But even there, it’s harder to find the same explosive growth we saw in the past. Valuations still look high relative to current KPIs.
Think about it this way: if you have an industrial company growing 10% annually with a 10% margin, it would trade at maybe 6x EBITDA. Yet here in SaaS, you still see revenue multiples being applied, which is quite generous.
Filip Drazdou:
So, to sum it up:
- Global uncertainty persists – geopolitical tensions in the U.S., Middle East, Ukraine. That keeps sentiment subdued.
- Growth is decelerating. Winning new customers is harder in a mature market. Corporates are already saturated with SaaS solutions.
- Revenue multiples are fading as the market matures and competition increases.
- AI is a major disruptor. SaaS companies that embrace it effectively may thrive, but many are moving too cautiously and risk being overtaken by new entrants.
- Valuations remain high relative to fundamentals. For sellers, it’s still a good time to exit.
If you have a mature SaaS company with slowing growth, it may be the right time to consider selling.
If you’re running an AI-first company with real traction and low churn, it’s probably better to keep building for the next two years. Valuations for those companies are likely to skyrocket.
Filip Drazdou:
For founders, the most important takeaway is to think hard about the next three years. Where will your growth and profitability really come from?
Sometimes, selling now is the better deal. For example, if you can sell a business generating $1 million in annual cash flow for $20 million- that’s essentially getting paid 20 years of uncertain future profits upfront. For many, that’s a very reasonable exit.
Marcin Majewski:
Exactly.
Filip Drazdou:
So with that, let’s move to the Q&A.
Yes, the slides will be shared with all participants. You’ll get a link to the deck and the recording by email.
Audience question: Are the multiples you presented for public or private companies?
Marcin Majewski:
The benchmarks we presented today are for public SaaS companies. Private company valuations usually come at a discount – typically 20–50%, depending on the specifics.
Audience question: Will you include EBITDA multiples in future analysis?
Filip Drazdou:
Yes, that’s exactly what we plan to do next. Historically, it wasn’t relevant because so few SaaS companies were profitable. But now, with more listed SaaS firms finally reaching profitability, EBITDA multiples are becoming more meaningful.
Still, many SaaS companies remain unprofitable even at the EBITDA level, so it will be tricky to get a full picture.
Audience question: What is the EV/RG ratio?
Marcin Majewski:
It’s something we created to adapt the traditional PEG ratio, Price-to-Earnings-to-Growth – to the SaaS world. Since SaaS companies are often unprofitable, we use Enterprise Value-to-Revenue-to-Growth instead. It’s a way of measuring how much you’re paying for each unit of growth.
