MarketTracker™
B2B SAAS TECHNOLOGY SECTOR
Covering the six month period ending 31 January 2021
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This document contains significant assumptions and has been prepared by Boxington Corporate Finance (Boxington) based on publicly available information, or additional information
supplied by the owners and/or managers of the companies described in this document, which has not been independently verified. Accuracy and completeness of the information provided
has been presumed and, therefore, its content may or may not be accurate and complete. No representation or warranty, either express or implied, is provided in relation to the accuracy,
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• VALUATION TRACKER
IMPORTANT NOTICE
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• VALUATION TRACKER
“Investors are more optimistic than ever about the B2B SaaS
sector’s long-term growth prospects because of the
permanent impact of the pandemic”
ALEX COOPER
Assistant Director
Boxington Corporate
Finance
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LONDON
52 Brook Street
London
W1K 5DS United Kingdom
T +44 (0)207 355 6270
TOKYO
8th Floor, TOC Dai-ichi Building
1-8-3 Shibuya, Shibuya-ku
Tokyo 150-0002 Japan
T +81 (0)50 5534 9624
CHICAGO
150 S Wacker Drive
Chicago, IL 60606
United States
T +1 (312) 788 2620
B2B SAAS TECHNOLOGY SECTOR
MarketTracker™
BOXINGTON is a modern, full service corporate
finance advisory house, operating nationally and
internationally out of London (UK), and focused
exclusively on advising mid-market companies
across the Business to Business (B2B) Services
and Technologies space including the SaaS
Technology sector.
TIM EVANS
Managing Director
T +44 (0)207 355 6272
T +44 (0)7584 902 744
E twe@boxington.com
SATNAAM KAUR VIRDEE
Research Manager
T +44 (0)207 268 2265
T +44 (0)7547 531 226
E skv@boxington.com
REPORT AUTHORS
ALEX COOPER
Assistant Director
T +44 (0)207 268 2025
T +44 (0)7469 927 413
E ac@boxington.com
ABOUT US
REPORT SUMMARY
● The pandemic has accelerated by many years the on-going
shift towards digitisation and given an unprecedented growth
opportunity to B2B SaaS businesses, with average share
valuations increasing by c.33% in the period – see page 4
● With the light at the end of the Covid tunnel starting to appear,
investors are more optimistic than ever about the B2B SaaS
sector’s long-term growth prospects because of the
permanent impact of the pandemic including, but not limited
to, remote working, remote education/ training and renewed
employee/ consumer engagement methods.
● Valuation revenue multiples performed strongly, with the
average quoted multiple moving meaningfully upwards by
c.22% to 9.8x over the six months to 31st Jan 2021 – see page 5
●
It can be seen from the wide distribution of multiples that
businesses undergoing cloudification/ transition to SaaS
models attract lower multiples than those which are already
SaaS-based.
● M&A deal activity in B2B SaaS was buoyant during the period.
The nature of deals highlighted the on-going shift in the B2B
M&A market of buyers acquiring niche SaaS businesses to
broaden, digitise, differentiate or modernise existing services –
see pages 7-8
● We are often asked about SaaS valuation dynamics and have
therefore finished our report with a look at the key factors that
influence revenue multiples of B2B SaaS businesses – see
pages 10-11
Boxington is authorised and regulated by the Financial Conduct Authority.
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FROM 1 AUGUST 2020 TO 31 JANUARY 2021
Percentage change in share price (%)• VALUATION TRACKER
VALUATION MOVEMENTS
© 2021 Boxington Corporate Finance
UK
USA
EUROPE
APAC
49.7%
88.9%
48.0%
-3.1%
13.3%
10.4%
4.9%
10.5%
97.1%
65.6%
48.8%
-6.9%
52.1%
3.3%
-8.8%
59.4%
-20.0%
0.0%
20.0%
40.0%
60.0%
80.0%
100.0%
Dotdigital’s strong share price performance has been
driven by the pandemic’s acceleration of digital marketing,
which is bulking up the new business pipeline and driving
increased uptake of Dotdigital's SMS and chat offerings.
In addition, the company continues to execute well on its
geographic expansion into the Americas and APAC
regions, with FY20 revenue growing by 12% in FY20.
Despite Sage’s relatively decent FY20 (Sep end)
results its share price has been one of the
weaker performers over the past 6 months.
This is largely due to its slowing growth,
increasing OpEx and the challenge of the on-
going cloudification process of its portfolio.
ReadyTech, a provider of people
management software, has enjoyed a
rally in its share price thanks to its
acquisition of Open Office, a local
Government software solutions provider
with operations in ANZ and the UK.
Investors expect the deal will add
revenue diversification and offer a
beachhead to a future UK expansion.
Average
movement
+33.3%
Serviceware’s valuation increased strongly
on account of its recent revenue growth
of +16% year-on-year, driven by SaaS
revenues doubling (comprising 41% of
group revenues) as the Business
continues its shift away from a licence-
based model. This transition to SaaS is
reflected in Serviceware’s subdued
revenue multiple (see overleaf).
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Change in REVENUExover 6 monthsFROM 1 AUGUST 2020 TO 31 JANUARY 2021
REVENUE MULTIPLE MOVEMENTS
* Discounts to public company multiples are typically needed when applied to private companies to reflect risk and liquidity differentials.
© 2021 Boxington Corporate Finance
Current EV/Revenue multiple (decreased)
Prior 6 months EV/Revenue multiple
Key
Current EV/Revenue multiple (increased)
UK
USA
EUROPE
APAC
7.7x
6.7x
7.0x
3.8x
3.7x
14.6x
3.7x
5.9x
11.3x
12.5x
1.3x
26.6x
11.6x
10.5x
4.7x
3.7x
9.2x
11.1x
8.6x
3.5x
4.0x
18.7x
5.7x
7.5x
18.8x
15.2x
2.0x
20.6x
12.1x
10.4x
3.4x
5.4x
0.0x
5.0x
10.0x
15.0x
20.0x
25.0x
30.0x
Ceridian’s multiple increased significantly
by c.28% on the expectation that its
sales activity will continue to ramp up,
with it achieving pre-COVID sales
targets and announcing a number of
enterprise customer wins. Growth is
expected to be driven by a combination
of the acquisition and successful
integration of Excelity, driving strong
growth in Asia Pacific, and the launch
of its new Digital Wallet product which
has been gaining strong traction.
The c.23% drop in TeamViewer’s multiple reflects investors
question on whether it can sustain its supernormal growth
(42% yoy revenue growth). However, its multiple remains high
given the long-term change in working patterns from which it
will continue to benefit.
PayGroup has felt the impact of Covid
with reduced demand from the
workforce management firms that use
its SaaS payroll billing software. The
decrease of c.28% in its multiple, reflects
the challenge single/ limited product
SaaS firms face when demand for
their core product dips.
Average
multiple
9.8x
Average
movement
+22.4%
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M&A ANALYSIS
UNDERSTANDING WHY B2B BUYERS HAVE MADE SAAS ACQUISITIONS
Covering the six month period ending 31 January 2021
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UNDERSTANDING WHY B2B BUYERS HAVE MADE SAAS ACQUISITIONS
• VALUATION TRACKER
M&A ANALYSIS
• Our M&A matrix (opposite) assesses the
reasons why selected B2B SaaS acquisitions
have been made by their buyers over the past
six months.
• We see the majority of deals weighted towards
the right-hand side of the matrix, highlighting
the on-going shift in the B2B M&A market of
buyers (both technology and services) acquiring
niche SaaS businesses to broaden, digitise,
differentiate or modernise existing services.
• This shift towards SaaS has been accelerated by
Covid, as technology and the tech-enablement
of services becomes a mainstream commercial
norm, not least to meet the long-term changes
in working, education and engagement models.
• We expect buyers to continue to acquire for
scale and international reach as the
addressable market and demand for SaaS
technologies continues to grow and accelerate.
• See overleaf for a closer look at the selected
deals.
“This shift towards SaaS has
been accelerated by Covid,
as technology and the tech-
enablement of services
becomes a mainstream
commercial norm ”
Alex Cooper
Assistant Director
ac@boxington.com
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UNDERSTANDING WHY B2B SaaS BUYERS HAVE MADE ACQUISITIONS
• VALUATION TRACKER
M&A ANALYSIS
© 2021 Boxington Corporate Finance
INCREASING RANGE
OF PRODUCTS
INCREASING
GEOGRAPHIC COVERAGE
INCREASING MARKET
SHARE & SYNERGIES
DIFFERENTIATING
EXISTING PRODUCTS
SCALE
SERVICES
DEFENSIVE
STRATEGIC
Buyers
Asia and Australia
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B2B SAAS VALUATION GUIDANCE
UNDERSTANDING HOW REVENUE MULTIPLES ARE DETERMINED
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• VALUATION TRACKER
“Valuation of B2B SaaS businesses are mainly, but not
entirely, determined by the aggregate of their
Fundamental metrics and Growth metrics ”
TIM EVANS
Managing Director
Boxington Corporate
Finance
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VALUATION GUIDANCE FOR SAAS BUSINESSES WITH <£10M ARR
• VALUATION TRACKER
SAAS VALUATION MATRIX
FUNDAMENTAL
METRICS
GROWTH
METRICS
LOW
MEDIUM
HIGH
HIGHMEDIUMLOWSaaS vs NON SaaS REVENUE MIXEXISTING SCALE (REVENUE) & SCALABILITYDIFFERENTIATED PRODUCT/ MODELSCARCITY VALUEADDRESSABLE MARKET SIZEANNUAL RECURRING REVENUE (ARR)
CLIENT LIFETIME VALUE (CLV)
RULE OF 40*
CLIENT ACQUISITION COSTS (CAC)
AVERAGE REVENUE PER CLIENT (ARPC)
• Valuation of mid-market
B2B SaaS businesses are
mainly, but not entirely,
determined by the
aggregate of their
Fundamental metrics and
Growth metrics. See
matrix opposite where we
show some (top 5) of the
key metrics.
• As in the case for
traditional non-SaaS
valuation, SaaS valuation is
additionally influenced by
external factors such as the
strategic ambitions of
individual buyers for any
given SaaS asset and the
level of competitive tension
that is created in an
investment process.
• To discuss further please
contact Tim Evans,
Managing Director, at
twe@boxington.com
* Rule of 40 = Revenue growth % + Profit margin %
Top 5
Top 5
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APPENDIX
BASE DATA
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B2B SaaS TECHNOLOGY SECTOR
• VALUATION TRACKER
BASE DATA
UK
USA
EUROPE
APAC
USD$
Enterprise Value (EV)
1,844.20 700.63
1,577.02 9,084.04 3,734.05 14,066.66 3,792.18 2,737.13 1,777.00
576.62
170.30 10,976.47 289.88
360.87
37.40
163.09
Comparable EV (-6
months)
1,277.66 401.30
1,246.82 10,342.63 3,457.83 13,143.69 2,399.94 2,127.71
968.74
391.70
109.23 12,637.63 207.00
415.56
39.24
105.83
Market Capitalisation
2,029.36 729.32
1,666.85 8,865.96 3,210.06 13,611.96 2,642.26 2,530.02 1,800.51
567.84
205.84 10,369.02 346.09
450.21
42.65
147.88
Net Debt
-185.16
-28.69
-89.82
218.08
523.99
454.70
1,149.92
169.97
-23.42
8.78
-35.42
607.45
-53.05
-92.76
-6.83
14.49
Last 12 Months (LTM)Revenue
193.94
65.02
180.44
2,610.14
908.45
841.50
683.59
375.69
98.12
39.26
86.86
536.02
23.74
38.32
10.33
30.06
EBITDA
-75.99
19.63
54.30
795.52
148.50
98.40
100.36
-115.46
32.01
10.68
-4.45
257.60
-8.30
-12.90
0.39
6.60
EBIT
-84.49
16.98
21.86
711.86
44.38
73.70
26.71
-143.34
28.41
8.70
-5.88
220.01
-9.86
-16.89
-0.09
4.27
EV/REVENUEx
9.5x
10.8x
8.7x
3.5x
4.1x
16.7x
5.5x
7.3x
18.1x
14.7x
2.0x
20.5x
12.3x
9.3x
3.5x
5.4x
EV/REVENUEx (-6 months)
7.2x
6.4x
7.0x
3.9x
3.8x
15.6x
4.1x
6.3x
10.8x
10.7x
1.3x
25.6x
10.9x
11.8x
5.1x
3.8x
As at 31 January 2021
Source
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