European SaaS
report
2023
In partnership with
This report is intended for professional investors only; see the back of the report for important disclosures.
GP Bullhound Corporate Finance Ltd and GP Bullhound Asset Management Limited are authorised and regulated
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December 2023
2023 EUROPEAN SAAS SURVEY
“Last year, we published our first European SaaS report to benchmark key performance metrics
and explore deal activity amid market uncertainty following a sharp decline in fundraisings in
2022. Given the challenging macroeconomic environment and the prevalent focus on cash
preservation and profitability, it is unsurprising that growth levels across the European SaaS
ecosystem remain muted, with early-stage and mature SaaS companies seeing a significant
slowdown. This year’s report also highlights the continued focus on capital efficiency, with over
a third of companies surveyed now profitable, and mature SaaS companies seeing significant
improvements in headcount productivity.
We include a public market update highlighting the emphasis on profitability and a modest
rebound in European valuations, which have reverted in line with the 3-year mean. While 2023
has seen a significant decline in SaaS fundraising activity, overall funding remains above pre-
pandemic levels.
Despite the challenging market conditions, M&A activity has remained resilient. The recent
growth in strategic M&A, combined with record levels of private equity dry powder has
sustained quarterly deal activity following the mid-2022 peak, with $15bn of disclosed deals
so far in 2023, surpassing the equivalent period last year.”
ALEXIS SCORER, PARTNER AT GP BULLHOUND
The view from GP Bullhound
Source: GP Bullhound Insights
2023 EUROPEAN SAAS SURVEY
Key takeaways
FOREWORD
Significant increase in ARR per FTE to €124k
ARR per FTE exceeds €100k above €5m ARR. Average has
grown 30% vs 2022 GP Bullhound European SaaS report
Increased emphasis on profitability with Rule of 40
Correlation of revenue multiples to Rule of 40 has doubled
while correlation of multiples with profitability has grown 14x
Median ARR growth declined significantly to 27%
Median ARR growth has decreased from 44% in 2021 to
27% in 2022 for SaaS companies with more than €25m ARR
SaaS valuations stabilising in-line with 3-year mean
Average European SaaS valuations trading at 5x, close to the
3-year average
Slight improvement in NRR to 105% Year-on-Year
Median Net Revenue Retention for European SaaS businesses
was 105% in 2022, an increase from 104% in 2021
Multiples for listed SaaS companies rebounding
Average valuations across our public European SaaS have
rebounded by c.11%, with multiples increasing from c.4.3x at
the start of the year to c.4.8x by the end of October
c.5% decrease in Gross Margins from 2021 to 2022
Median gross margins have fallen from 80% in last year’s
report to 75% this year
Resilient M&A transaction activity in 2023 YTD
Average of 178 transactions per quarter in 2023 YTD, 30%
above the 3-year average
Over a third of companies surveyed now profitable
R&D and G&A spend broadly in-line with last year and c.40% of
cohorts with ARR growth below 60% are profitable
Market for capital raising remains subdued
2,466 total fundraising rounds 2023 YTD, a 47% decrease
YoY and a 65% decrease in rounds above €40m
Source: GP Bullhound Insights
GP Bullhound European SaaS survey
GP BULLHOUND EUROPEAN SAAS SURVEY
Dataset
overview
Revenue
analysis
Customer acquisition
and retention
benchmarks
Operational
efficiency analysis
GP BULLHOUND EUROPEAN SAAS SURVEY
15%
23%
9%
13%
14%
17%
9%
Sales and marketing
Vertical SaaS
Collaboration and
workflow
Infrastructure and
security
HR / ERP
Data and analytics
Other
18%
24%
12%
35%
11%
<20 FTE
20 - <50 FTE
50 - <100 FTE
100 - <500 FTE
500 FTE+
37%
13%
12%
21%
17%
<€5m
€5 - <€10m
€10 - <€25m
€25 - <€100m
€100m+
45%
35%
9%
12%
< €5m
€5 - <€25m
€25 - <€50m €50m+
18%
18%
14%
11%
8%
30%
Spain
United Kingdom
Sweden
France
Germany
Other
Total ARR (€m)
Our dataset includes responses from
over 100 European SaaS businesses
serving Enterprise and SME customers
across a broad range of growth rates.
Survey participants include start-ups and
scale-ups, with over a third of
respondents generating between €5m
ARR – €25m ARR in 2022.
Our dataset at a glance
DATASET
We compare European SaaS companies
of all sizes, as measured by ARR, FTEs,
and level of funding. We crunch the data
on key metrics including CAC, payback
period, LTV/CAC, Rule of 40, and
retention, to test a range of hypotheses.
Total amount raised (€m)
Respondents by HQ geography
Respondents by category
Number of FTEs
Source: GP Bullhound Insights
Note: Values >100% due to rounding
GP BULLHOUND EUROPEAN SAAS SURVEY
Dataset
overview
Revenue
analysis
Customer acquisition
and retention
benchmarks
Operational
efficiency analysis
GP BULLHOUND EUROPEAN SAAS SURVEY
Early-stage European SaaS companies (<€5m ARR)
have demonstrated higher median 2020/22 CAGR
than other cohorts, as one might expect given the
lower base.
As companies grow into the next band (€5m – €25m
ARR), the range of CAGRs drops only by c.10%
across the whole cohort, indicating a healthy appetite
for growth, even as some companies generate five-
fold the ARR of those who are more early-stage.
However, as businesses begin to scale beyond €25m
ARR, not only does the median CAGR decrease to
c.40% across both cohorts, the spread of ARR CAGR
begins to tighten, deviating no more than 25% from
the median data point.
2-year ARR CAGR
significantly impacted
by low 2021/22
growth, which
declined to 27% from
45% in 2020/21
ARR ANALYSIS
ARR FY20/22 CAGR (%) / ARR (€m)
Min
Max
Median
75th percentile
25th percentile
Data covers company fiscal years 2020 and 2022
Source: GP Bullhound Insights
GP BULLHOUND EUROPEAN SAAS SURVEY
Across the European SaaS ecosystem, increases in
year-on-year growth have been muted across 2022,
with only the €5m < €25m cohort benefiting from a
marginal increase in incremental growth compared
with 2021.
We note that a number of our respondents in the
€5m–€25m ARR cohort have recently raised funds
(38% having raised in 2022 or later), which has
allowed companies to invest in their growth, despite
less favourable macro conditions. This is discussed in
more detail on page 22.
Two cohorts experienced their growth decrease by
c.50% or more: early-stage SaaS companies, whose
median growth fell from 100% to 33%, and mature
SaaS companies (€50m+ ARR), whose median
growth fell from 45% to 24%.
Growth across all
subsets of European
SaaS companies was
muted throughout 2022
compared to 2021
ARR ANALYSIS
ARR YoY Growth (%) / ARR (€m)
Min
Max
Median
75th percentile
25th percentile
<€5m ARR
€5m < €25m ARR
€25m < €50m ARR
€50m+ ARR
100%
38%
125%
200%
0%
0%
33%
50%
25%
8%
20%
33%
67%
100%
17%
22%
35%
50%
85%
83%
61%
39%
26%
13%
21%
35%
48%
57%
90%
72%
45%
29%
13%
50%
55%
24%
14%
2%
Data covers company fiscal years 2021 and 2022
Source: GP Bullhound Insights
GP BULLHOUND EUROPEAN SAAS SURVEY
Significant
improvements in
headcount efficiency
amongst the larger
cohorts (€50m+ ARR)
AVERAGE ARR PER FTE ANALYSIS
Average ARR per FTE (€‘000)
€74.9
€94.9
€124.4
€142.2
€81.3
€113.9
€126.3
€279.2
<€5m
€5 - <€25m
€25 - <€50m
€50m+
2022 European SaaS Report
2023 European SaaS Report
Dec-21 ARR
Data covers company fiscal years 2021 and 2022
Last year, we observed that as European SaaS
businesses scale, the hiring focus switches more from
R&D to those roles which are directly linked to ARR
generation (such as sales and marketing).
For businesses under €50m ARR, this trend has
remained consistent across our 2022 dataset, with
100k per FTE being achieved above €5m ARR.
Additionally, we note that each cohort has experienced
an increase in ARR per FTE YoY, reflecting a greater
emphasis on capital efficiency in the more challenging
funding environment.
Mature SaaS companies have almost doubled their ARR
per employee from €142k to €279k between 2021 and
2022, suggesting that more mature SaaS companies
have made significant cuts in headcount across 2022
while seeing minimal impact on revenue. However, it is
worth noting that the constituents in this year’s survey
differ mildly from last year and thus may cause some
disparity in like-for-like trends.
Source: GP Bullhound Insights
GP BULLHOUND EUROPEAN SAAS SURVEY
Dataset
overview
Revenue
analysis
Customer acquisition
and retention
benchmarks
Operational
efficiency analysis
GP BULLHOUND EUROPEAN SAAS SURVEY
Enterprise customers
typically generate an
ARR which is 10-fold
that of SME
customers
ARR per customer by target customer group
(€‘000)
Data covers company fiscal year 2022
Average CAC by target customer group
(€‘000)
Data covers company fiscal year 2022
ARR ANALYSIS
€6.1
€63.2
€59.8
SME
Enterprise
SME and
Enterprise
€6.8
€28.8
€66.1
SME
SME and
Enterprise
Enterprise
The average ARR for Enterprise-focused SaaS
companies is €63k, which is over 10x higher than
those who are SME-focused at €6k.
This trend is also reflected across Customer
Acquisition Costs, of which Enterprise-focused SaaS
companies spent €66k per acquired customer and
SME-focused companies spent €6k.
Interestingly, SaaS companies that are focused on
both customer segments demonstrate a similar ARR
per customer to Enterprise-focused SaaS companies,
but their CAC is significantly lower. This is partially
driven by sector segmentation, as we note that 50%
of our Enterprise respondents specialise in
Infrastructure & Security or Data & Analytics – two
industries that operate lower velocity sales models.
Source: GP Bullhound Insights
GP BULLHOUND EUROPEAN SAAS SURVEY
SaaS companies which
are focused on one set
of customers
command higher
LTV/CAC ratios
CAC ANALYSIS
Average LTV/CAC by target customer group
Data covers company fiscal year 2022
Average LTV/CAC by product offering
category
Data covers company fiscal year 2022
European SaaS companies which focus on both SME
and Enterprise-grade customers have an average
LTV/CAC of 5.8x, significantly lower than those who
only tailor their focus to one customer group. SME-
focused SaaS companies typically have an LTV/CAC
of 8.3x, while the LTV/CAC of Enterprise SaaS
companies is marginally higher at 8.9x.
SaaS companies operating in the HR / ERP space
have the highest LTV/CAC of 10.8x, while Sales &
Marketing SaaS companies have the lowest at 4x.
10.8x
10.6x
10.0x
7.8x
5.3x
4.0x
4.2x
HR / ERP
Collaboration
and workflow
Vertical SaaS
Infrastructure
and security
Data and
analytics
Sales and
marketing
Other
8.3x
8.9x
5.8x
SME
Enterprise
SME and
Enterprise
Source: GP Bullhound Insights
GP BULLHOUND EUROPEAN SAAS SURVEY
CAC and ARR both
increase substantially
as contract duration
increases
Average CAC by contract duration (€‘000)
Data covers company fiscal year 2022
CAC ANALYSIS
€2.4
€26.7
€18.0
€ 39.5
€ 30.2
<1 year
1 year
2 years
3 years
3+ years
Average ARR by contract duration (€‘000)
Data covers company fiscal year 2022
€6.8
€16.7
€14.9
€ 24.6
€ 23.2
<1 year
1 year
2 years
3 years
3+ years
Contracts which span three years in duration are the
costliest to acquire, requiring an average spend of
€39.5k per customer.
Companies who service longer-term contracts are
typically rewarded with higher ARR on average, with
mean ARR increasing from €6.8k for contracts less
than one year in length to €20k+ for contracts
spanning three years or longer.
We note that companies which operate on longer
contract terms may yet to feel the true impact of the
current economic headwinds. This is especially true
of those servicing contracts of over three years, as
these would have been negotiated at the height of
the technology boom and therefore operate on terms
more favourable than what would be seen in the
current environment.
Source: GP Bullhound Insights
GP BULLHOUND EUROPEAN SAAS SURVEY
Most European SaaS
companies have a
payback period of 10
– 12 months
Average payback period by target customer
group (months)
Data covers company fiscal year 2022
The payback period for European SaaS companies
steadily declines as ARR grows; those with €50m+
ARR typically have payback periods of nine months,
while more early-stage SaaS businesses have
payback periods of 13+ months. This is usually for
one of three reasons:
1. The SaaS business has a high volume of
customers, allowing them to leverage lower CAC
through scale;
2. The SaaS business has a low volume of high-
value contracts, the value of which begins to
outpace CAC as ARR scales; or
3. As ARR increases, a company’s Sales &
Marketing function grows more mature, leading
to greater spend on customer acquisition.
Pure Enterprise-focused SaaS companies exhibit the
longest payback periods (~14 months), while those
focused on both Enterprise and SME companies have
the shortest payback periods (~9 months).
Average payback period by product offering
category (months)
Data covers company fiscal year 2022
PAYBACK PERIOD ANALYSIS
11.8
13.7
9.3
SME
Enterprise
SME and
Enterprise
13.0
14.4
10.9
9.4
<€5m
€5 - <€25m
€25 - <€50m
€50m+
Source: GP Bullhound Insights
GP BULLHOUND EUROPEAN SAAS SURVEY
FY21
FY22
Only SMEs experienced a decline in GRR YoY (down from 95% in 2021 to 92% in 2022), while Enterprise & SME- and Enterprise-focused SaaS companies both
maintained marginal 1% improvements. However, as noted earlier in the report, these companies typically have longer contract durations (sometimes greater than
three years). Therefore, it may be the case that recent economic headwinds have not yet impacted Gross Revenue Retention metrics. Additionally, we note that
some respondents may have excluded down-sell from their calculations, thereby driving higher median rates across the dataset.
Only SME-focused SaaS companies experienced a decline in
Gross Revenue Retention between 2021 and 2022
RETENTION ANALYSIS
Gross Revenue Retention (%)
SME-focused FY21 vs FY22
FY21
FY22
70%
75%
80%
85%
90%
95%
100%
FY21
FY22
90%
Represents 75th and 25th percentile of respondent distribution
Median
95%
92%
90%
91%
93%
94%
Gross Revenue Retention (%)
Enterprise-focused FY21 vs FY22
Gross Revenue Retention (%)
SME & Enterprise-focused FY21 vs FY22
Source: GP Bullhound Insights
GP BULLHOUND EUROPEAN SAAS SURVEY
FY21
FY22
Retention metrics are critical drivers of growth for European SaaS companies. Net Revenue Retention (NRR) is considered by many to be the strongest indicator of
long-term success. NRR is therefore an interesting barometer of the European SaaS ecosystem. Across the board, median NRR has increased YoY, with the spread of
data points also tightening. In times of tightening spend and access to funding, there is a greater emphasis on retaining customers and generating upsell as it is a
more capital efficient way of maintaining growth.
Net Revenue Retention rates increased across all categories of
European SaaS companies across 2022
RETENTION ANALYSIS
Net Revenue Retention (%)
SME-focused FY21 vs FY22
FY21
FY22
85%
90%
95%
100%
105%
110%
115%
120%
125%
FY21
FY22
98%
104%
105%
107%
103%
106%
Net Revenue Retention (%)
Enterprise-focused FY21 vs FY22
Net Revenue Retention (%)
SME & Enterprise-focused FY21 vs FY22
Source: GP Bullhound Insights
Represents 75th and 25th percentile of respondent distribution
Median
GP BULLHOUND EUROPEAN SAAS SURVEY
Dataset
overview
Revenue
analysis
Customer acquisition
and retention
benchmarks
Operational
efficiency analysis
GP BULLHOUND EUROPEAN SAAS SURVEY
Gross Margins have
come down c.5%
across all revenue
bands since 2021
OPERATIONAL EFFICIENCY ANALYSIS
Gross margin (%) / ARR (€m)
Data covers company fiscal years 2021 and 2022
Dec-22 ARR
75%
79%
80%
80%
70%
74%
77%
74%
<€5m
€5 - <€25m
€25 - <€50m
€50m+
2022 European SaaS Report
2023 European SaaS Report
For SaaS companies, direct costs include but are not
limited to:
▪ Hosting costs
▪ Customer support/customer success costs
▪ Third-party licenses utilised in the software’s
application
Last year, we observed that as a business scales
beyond €5m ARR, Gross Margins stabilise at 80%
due to diminishing returns on efficiency gains. While
this trend has somewhat continued into 2022, Gross
Margins have instead stabilised at 75%, as SaaS
companies have struggled to pass on inflationary
pressures such as higher direct costs (including
those relating to hosting and customer success).
It may also be the case that contract renewals are
typically needed for price increases. While many of
our respondents operate multi-year contracts, we
see more SaaS companies implementing inflationary
price increases this year, as and when contract
renewal is due.
Source: GP Bullhound Insights
GP BULLHOUND EUROPEAN SAAS SURVEY
40%
60%
39%
61%
44%
56%
36%
64%
Over one third of
companies across all
ARR growth cohorts
were profitable in
2022
EBITDA MARGIN ANALYSIS
Proportion of profitable companies (%) by 21/22 ARR growth
In 2022, c.40% of companies with 21/22 ARR
growth less than 60% were profitable, with the
60%+ ARR growth cohort containing marginally
fewer profitable companies (36%).
This would indicate that growth rates were not a
particularly strong indicator of profitability in 2022,
with the proportion of profitable companies
remaining broadly consistent across all ARR
growth cohorts.
Data covers company fiscal year 2022
<20%
ARR growth
20% - 40%
ARR growth
40% - 60%
ARR growth
60%+
ARR growth
Profitable
Unprofitable
Source: GP Bullhound Insights
GP BULLHOUND EUROPEAN SAAS SURVEY
The results of our survey suggest that total
overheads as a proportion of revenue typically total
70% to 90% for European SaaS companies of all
sizes. This is lowest for companies between €5m
and €25m ARR (typically before the Sales &
Marketing function begins to scale) and highest for
those above €25m ARR (where access to capital
increases).
Our data shows that Research & Development
costs continue to decline as a proportion of
revenue as ARR increases. By contrast, once ARR
grows above €25m, Sales & Marketing and General
& Administrative expenses both tick up sharply, as
more costs are spent on areas which directly
generate ARR.
R&D expense as a
proportion of revenue
declines steadily as
SaaS businesses
scale, shifting focus
to Sales & Marketing,
which peaks at 40%
OPERATIONAL EFFICIENCY ANALYSIS
Cost build up (%) as a function of revenue (€m)
Data covers company fiscal year 2022
30%
26%
40%
36%
26%
24%
21%
19%
33%
<€5m
€5 - <€25m
€25m+
Sales & Marketing
Research & Development
General & Administrative
Dec-22 ARR
Source: GP Bullhound Insights
GP BULLHOUND EUROPEAN SAAS SURVEY
Significant 21/22
ARR growth was
demonstrated most
by companies who
raised funds in the
last 12 months
FUNDING ENVIRONMENT
Average 21/22 ARR growth (%) by date of
latest funding round
Average 21/22 ARR growth (%) by date of
next funding round
Data covers company fiscal year 2022;
Excludes <€5m ARR
Data covers company fiscal year 2022;
Excludes <€5m ARR
29%
32%
40%
81%
53%
pre-2020
2020
2021
2022
2023
52%
21%
21%
66%
85%
Not
planning
0-6
months
6-12
months
12-24
months
24+
months
On average, companies that raised capital in 2022
grew 81% between 2021 and 2022 (double that of
companies which last raised funds in 2021),
indicating that new capital generally sees the
greatest return in the year it is raised.
While our dataset looked only at 21/22 ARR
growth, we note that companies who have raised
capital this year did so off the back of a solid
foundation of ARR growth (53%).
Looking forward, we see that companies with
higher growth are either not raising funds for at
least the next 12 months, or not planning to raise
funds at all.
Source: GP Bullhound Insights
European SaaS public market update
EUROPEAN SAAS PUBLIC MARKET UPDATE
Oct-20
Jan-21
Apr-21
Jul-21
Oct-21
Jan-22
Apr-22
Jul-22
Oct-22
Jan-23
Apr-23
Jul-23
European SaaS - TEV/Forward Total Revenue
US SaaS - TEV/Forward Total Revenue
European SaaS - TEV/Forward Total Revenue Avg
US SaaS - TEV/Forward Total Revenue Avg
6.7x
4.9x
10.7x
5.5x
The valuation gap between public US and European SaaS
companies has stabilised throughout 2023
Sources: GP Bullhound Insights and Capital IQ (30 September 2023)
PUBLIC EUROPEAN SAAS MARKET
The valuation gap between European and US SaaS companies has converged, with growing investor focus on profitable growth. Despite this convergence, publicly
listed US SaaS companies continue to be valued at a c.20%–40% premium compared with their European counterparts.
More broadly, despite continued uncertainty in the global macroeconomic environment, multiples have been increasing across 2023 in both geographies (US
consensus estimates increasing c.30% from Jan-23 to Sep-23; EU consensus estimates increasing c.15% from Jan-23 to Sep-23).
10.0x
1.3x
1.8x
Average CY23E EBITDA margin
Average CY23E revenue growth
20%
29%
14%
9%
EUROPEAN SAAS PUBLIC MARKET UPDATE
Rule of 40 has been a consistent driver of valuations for European
SaaS stocks
Sources: GP Bullhound Insights and Capital IQ (30 September 2023)
Note: [1] Indexed to 100
PUBLIC EUROPEAN SAAS MARKET
Investors have typically used the “Rule of 40," where combined revenue growth rates and profit margins exceed or equal 40%, as a key metric for determining
the quality of software assets. The graph below demonstrates how, in the lead-up to the October 2021 market peak, the average Rule of 40 was c.50% for our
European SaaS index. As consensus estimates for margins and growth rates began to decline into 2022 (eventually reaching a low of less than 20% in October
2022), valuations also fell c.50% across this same period, indicating that the Rule of 40 has been a consistent indicator of valuations over the past three years.
GPB European SaaS Index NTM Rule of 40 consensus against MSCI Europe index
Data as at 30 September 2023
50
100
150
200
250
300
350
0%
10%
20%
30%
40%
50%
60%
01-Apr-20
01-Oct-20
01-Apr-21
01-Oct-21
01-Apr-22
01-Oct-22
01-Apr-23
01-Oct-23
GPB European SaaS forward revenue multiples
NTM EBITDA margin + NTM revenue growth
GPB European SaaS forward revenue multiples
EUR SaaS index NTM Ro40
[1]
EUROPEAN SAAS PUBLIC MARKET UPDATE
R² = 0.5314
- -x
5.0x
10.0x
15.0x
20.0x
25.0x
(10.0%)
-
10.0% 20.0% 30.0% 40.0% 50.0% 60.0% 70.0%
NTM revenue multiple
“Rule of 40” – NTM EBITDA margin + NTM revenue growth
R² = 0.2613
- -x
5.0x
10.0x
15.0x
20.0x
25.0x
(10.0%)
-
10.0% 20.0% 30.0% 40.0% 50.0% 60.0% 70.0%
NTM revenue multiple
“Rule of 40” – NTM EBITDA margin + NTM revenue growth
Public market investors are now placing greater emphasis on
the Rule of 40 than they were at market peak
Sources: GP Bullhound Insights and Capital IQ (30 September 2023)
Public market valuations for our public European SaaS index are c.2x more correlated with the Rule of 40 analysis now than they were during the market peak
of Oct-21. This is evidence of more disciplined investing in European SaaS companies.
GPB European SaaS Index Rule of 40 vs. EV / NTM Revenue
Data as at peak of the market (Oct-21)
GPB European SaaS Index Rule of 40 vs. EV / NTM Revenue
–Data as at Oct-23
Net Rule of 40
5.0x
Median NTM EV /
Revenue
Net Rule of 40:
11.4x
Median NTM EV /
Revenue
Net Rule of 40
3.5x
Median NTM EV /
Revenue
Net Rule of 40
6.4x
Median NTM EV /
Revenue
PUBLIC EUROPEAN SAAS MARKET
EUROPEAN SAAS PUBLIC MARKET UPDATE
Profitability has become a much more important driver
of valuations
Sources: GP Bullhound Insights and Capital IQ (30 September 2023)
As at Oct-23, profitability’s correlation with explaining valuations has increased 10-fold compared to the market high of Oct-21, clearly demonstrating a shift
in investor appetite towards public SaaS companies which can demonstrate steady cash flows. This shift is likely due to a multitude of factors, including the
high current interest rate environment and investors’ focus on profitable growth.
GPB European SaaS Index NTM EBITDA margins vs. EV / NTM Revenue
Data as at peak of the market (Oct-21)
R² = 0.0328
- -x
5.0x
10.0x
15.0x
20.0x
25.0x
(10.0%)
-
10.0%
20.0%
30.0%
40.0%
50.0%
NTM revenue multiple
NTM EBITDA margins
R² = 0.4331
- -x
5.0x
10.0x
15.0x
20.0x
25.0x
(10.0%)
-
10.0%
20.0%
30.0%
40.0%
50.0%
NTM revenue multiples
NTM EBITDA margins
GPB European SaaS Index NTM EBITDA margins vs. EV / NTM Revenue
Data as at Oct-23
PUBLIC EUROPEAN SAAS MARKET
EUROPEAN SAAS PUBLIC MARKET UPDATE
(10.0%)
-
10.0%
20.0%
30.0%
40.0%
50.0%
60.0%
(20.0%)
(10.0%)
-
10.0%
20.0%
30.0%
40.0%
50.0%
Consensus CY22 EBITDA margin
Consensus CY22 Revenue growth
High profitability, low growth
57.1% of peers
Low profitability, low growth
28.6% of peers
Low profitability, high growth
5.7% of peers
High growth, high profitability
8.6% of peers
The majority of public European SaaS businesses were profitable in
2022
Sources: GP Bullhound Insights and Capital IQ (30 September 2023)
2022 saw an increased emphasis being placed on profitability, as is evidenced by more than 65% of companies in our index having EBITDA margins above
20% and less than 5% being EBITDA negative.
Revenue growth (%) vs EBITDA margin (%) for GP Bullhound’s European SaaS index
Data covers company fiscal year 2022
PUBLIC EUROPEAN SAAS MARKET
EUROPEAN SAAS PUBLIC MARKET UPDATE
137%
116%
115%
113%
112%
112%
110%
107%
106%
103%
90%
85%
81%
Eagle Eye
Checkin.com
Exasol
Penneo
MotorK
Sopheon
ActiveOps
TeamViewer
SUSE
Lemonsoft
D4t4
Byggfakta
Pexip
Publicly available data indicates Net Revenue Retention is typically
between 105%–115% across our public European SaaS index
Sources: GP Bullhound Insights and Capital IQ (30 September 2023)
Notes: (1) ActiveOps, D4t4i is Y/E Mar 23 (2) Eagle Eye NRR % is to year end Jun 23 (3) SUSE NRR% is to Y/E Oct 22
Most companies who publish retention metrics have Net Revenue Retention over 100%, with the majority ranging between 105%–115%. While the upper end
of the range reaches 137%, we note that many companies implement different calculations when determining Retention, which can cause both positive and
negative relative impacts (i.e., Eagle Eye includes transactional revenue in their NRR calculations while many others exclude this type of revenue).
Disclosed Net Revenue Retention of GP Bullhound European SaaS index
Data covers company fiscal year 2022
PUBLIC EUROPEAN SAAS MARKET
EUROPEAN SAAS PUBLIC MARKET UPDATE
96%
94% 93% 92% 92% 92%
89% 88% 87% 86%
84% 83% 82%
80% 79% 78%
75%
72% 72% 71%
Nemetschek
Eagle Eye
Sage
SSH
EMIS
SUSE
Pexip
Mintra
Pagero
TeamViewer
Dassault
Penneo
ActiveOps
dotdigital
ESI
IDOX
Sopheon
Esker
SAP
Wolters
Average Gross Margin across European listed SaaS peers is
greater than 80%
Sources: GP Bullhound Insights and Capital IQ (30 September 2023)
Average: c.80%
While cost allocation in Gross Margin is company-specific, we note that the average Gross Margin across public European SaaS companies is 81.2%, with an
interquartile range of 72%–92% driven by the mix of business models in larger organisations across our index.
Pure SaaS players can achieve Gross Margins of >90%, whereas others have margins of sub-80%. SAP, for example, has a blended margin of 72% (although it
is worth noting that SAP’s gross margin contains service revenue, which carries a margin of c.22%. Their Software-dedicated gross margin is 89%, more in line
with a typical pure SaaS player). This indicates that pure SaaS players should benchmark to GM% of c.80% or above.
Gross Margin of GP Bullhound European SaaS index
Data covers company fiscal year 2022
PUBLIC EUROPEAN SAAS MARKET
EUROPEAN SAAS PUBLIC MARKET UPDATE
Benchmarking publicly listed European SaaS companies
PUBLIC EUROPEAN SAAS MARKET
Sources: GP Bullhound Insights and Capital IQ (30 September 2023)
Most public SaaS
companies experienced
moderate revenue growth
of between 15%–25%
41%
28%
17%
10%%
(12%)
Net Revenue Retention
metrics are broadly
comparable with private
SaaS companies, with a
median of c.100%–105%
81%
97%
110%
114%
137%
Gross Margins are
typically more widely
spread between 70% and
90%, given broader
definitions in cost
allocations, revenue mix,
and scale of revenues
96%
92%
83%
72%
53%
Given their relative
maturity, the volume of
public European SaaS
companies which are
profitable (c.10%+) is
higher than those which
are privately listed
52%
29%
20%
6%
(30%)
Over half of our public
European SaaS
companies are below
the 40% EBITDA
margin + Revenue
Growth threshold for
premium valuations
65%
44%
27%
15%
(28%)
European SaaS deal activity
EUROPEAN SAAS DEAL ACTIVITY
Quarterly deal volume has proved resilient in light
of current macroeconomic conditions, with the first
two quarters of 2023 on par with Q4 2022.
Additionally, while deal volumes have been
declining across 2023, all quarters have remained
above the long-term average of 137 deals per
quarter.
SaaS M&A volumes have stabilised since the mid-2022 peak and
remain well above pre-pandemic levels
EUROPEAN SAAS M&A DEAL ACTIVITY
European SaaS M&A deal volume
72
76
51
53
82
62
76
95
138 125 133
199 192
268 250
191 202 176 157
Q1-19
Q2-19
Q3-19
Q4-19
Q1-20
Q2-20
Q3-20
Q4-20
Q1-21
Q2-21
Q3-21
Q4-21
Q1-22
Q2-22
Q3-22
Q4-22
Q1-23
Q2-23
Q3-23
European SaaS M&A disclosed deal value
2020:
315 deals
2021:
595 deals
2022:
901 deals
YTD-23*:
535 deals
2020
$52.0bn
2021
$39.5bn
2022
$16.8bn
YTD-23*
$15.0bn
$8.8
$2.2
$30.0
$3.8
$1.8 $0.6 $1.3
$48.3
$7.7 $8.7
$13.1
$10.0
$4.6
$6.5
$1.1
$4.6
$6.9
$5.2
$2.8
Q1-19
Q2-19
Q3-19
Q4-19
Q1-20
Q2-20
Q3-20
Q4-20
Q1-21
Q2-21
Q3-21
Q4-21
Q1-22
Q2-22
Q3-22
Q4-22
Q1-23
Q2-23
Q3-23
(#)
($bn)
M&A
Sources: GP Bullhound Insights and DealRoom (Q1 2019 – Q3 2023)
Note: * YTD represents 1 January–30 September 2023
2019:
252 deals
2019
$44.7bn
Qtrly
Mean:
137
Qtrly
Mean:
$8.8bn
Total disclosed deal value in 2023 YTD ($15.0bn)
surpassed the equivalent period in 2022 ($12.2bn)
– a 23% increase. This was driven in part by several
larger-value deals, including:
▪ Concentrix’s merger with Webhelp for $4.8bn
▪ Silverlake’s buyout of Software AG for $2.8bn
▪ Edenred’s $1.4bn acquisition of Reward Gateway
EUROPEAN SAAS DEAL ACTIVITY
5%
4%
33%
3%
2%
3%
9%
63%
10%
11%
30%
85%
85%
83%
60%
2019
2020
2021
2022
YTD-23
Mega deals have historically dominated the market, with
c.90% of European SaaS deals attributable to
transactions above $1bn in 2019 and 2020. However,
the share of the total value from mega deals has
declined since 2021, comprising only c.66% of the
2023 YTD deal value.
With the exception of 2020, private equity deals have
been heavily weighted towards mega deals (60%–85%
of any given year). However, it is worth noting that there
has been an increased volume of take-privates, which
command sizeable valuation premiums.
Private equity activity has also been fuelled by record
levels of dry powder (global dry powder was c.$2.5tn as
of July 2023[1]).
After a somewhat muted 2022, larger strategic buyers
are back in full force in 2023, with the share of strategic
M&A value coming from larger deals increasing more
than two-fold from 31% to 69%, indicating a resurgence
in strategic buyer activity.
While SaaS mega deals
have historically
dominated the market,
they comprised only 2/3
of deal value in 2023
EUROPEAN SAAS M&A DEAL ACTIVITY BY SIZE
European SaaS deal value 2019-2023 YTD*
(% of total)
$4.1bn
2023 select transactions
100m-250m
250m-1,000m
1,000m+
0m-50m
50m-100m
M&A
Sources: GP Bullhound Insights and DealRoom (Q1 2019 – Q3 2023)
Note: * YTD represents 1 January–30 September 2023 [1] S&P Global Market Intelligence
$7.9bn
$13.5bn
$1.0bn
$9.3bn
9%
4%
12%
7%
1%
2%
6%
20%
7%
4%
5%
30%
27%
13%
92%
91%
58%
31%
69%
2019
2020
2021
2022
YTD-23
Strategic BuyersPrivate Equity
$10.9bn
$8.9bn
$26.0bn
$51.0bn
$35.4bn
Deal size: $4.8bn
BPO and CX
Deal size: $2.8bn
Enterprise SaaS
Deal size: $1.8bn
Employee Engmt.
Deal size: $1.2bn
Enterprise SaaS
EUROPEAN SAAS DEAL ACTIVITY
In YTD 2023, the UK has maintained the title of
most active market for SaaS M&A transactions but
continues to decline as a share of overall deal
volume (in our last report, the UK represented
29% of total activity while only comprising 23%
this year).
Overall, European deal volume across Q1–Q3
2023 has declined by 25% compared with the
same period in the prior year, driven by large
declines in the top three markets:
▪ United Kingdom (31% decline)
▪ France (27% decline)
▪ Germany (20% decline)
Of the top five European markets, only Sweden
experienced growth in deal activity, increasing
72% between 2022 YTD-equivalent and 2023
YTD.
UK, France and Germany
comprise close to half of
total European SaaS
M&A volumes
EUROPEAN SAAS M&A DEAL ACTIVITY BY COUNTRY
European SaaS M&A transactions
(% of deal volume)
Rest of Europe
(26.2%) Growth
22/23 YTD
36.9%
23.0%
13.0%
12.4%
8.1%
6.2%
UK
(30.9%) Growth
22/23 YTD
France
(26.5%) Growth
22/23 YTD
Germany
(19.5%) Growth
22/23 YTD
Sweden
72.0% Growth
22/23 YTD
Netherlands
(44.1%) Growth
22/23 YTD
YTD-23*
Total deals: 276
Growth
22/23 YTD*:
(24.7%)
M&A
Sources: GP Bullhound Insights and DealRoom (Q1 2019 – Q3 2023)
Note: * YTD represents 1 January–30 September 2023
EUROPEAN SAAS DEAL ACTIVITY
Fundraising volume has experienced a decline across
2023 YTD, with Q3 2023 falling by over 60% since the
Q2 2022 peak and every quarter in 2023 sitting below
the pre-Covid levels (2019) of c.1,000 deals per
quarter.
However, when excluding deals below $15m, there
have been an average of 71 fundraises per quarter
across 2023 YTD, notably above the average of 51 and
60 deals in 2019 and 2020, respectively. This
indicates that larger rounds have become more
frequent in the post-pandemic landscape.
Despite declining volumes of SaaS fundraising activity, overall deal
value remains above pre-pandemic levels
EUROPEAN SAAS PRIVATE PLACEMENT DEAL ACTIVITY
European SaaS private placement deal volume
European SaaS private placement deal value
2020:
4,589 deals
2020
$16.7bn
2021
$44.9bn
2022
$46.8bn
YTD-23*
$14.2bn
1,269
1,065 1,034 1,044
1,336
972
1,093
1,188
1,641
1,420 1,478
1,512 1,565
1,708
1,397 1,349
960
890
616
Q1-19
Q2-19
Q3-19
Q4-19
Q1-20
Q2-20
Q3-20
Q4-20
Q1-21
Q2-21
Q3-21
Q4-21
Q1-22
Q2-22
Q3-22
Q4-22
Q1-23
Q2-23
Q3-23
$3.7 $3.8
$5.0
$3.1 $3.9 $3.6 $4.1
$5.0
$8.5
$14.2
$11.8
$10.5
$17.2
$14.5
$8.1
$7.0
$4.1
$5.7
$4.4
Q1-19
Q2-19
Q3-19
Q4-19
Q1-20
Q2-20
Q3-20
Q4-20
Q1-21
Q2-21
Q3-21
Q4-21
Q1-22
Q2-22
Q3-22
Q4-22
Q1-23
Q2-23
Q3-23
2021:
6,051 deals
2022:
6,019 deals
YTD-23*:
2,466 deals
PRIVATE PLACEMENT
(#)
($bn)
Sources: GP Bullhound Insights and DealRoom (Q1 2019 – Q3 2023)
Note: * YTD represents 1 January–30 September 2023
2019:
4,412 deals
2019
$15.5bn
Qtrly
Mean:
1,239
Qtrly
Mean:
$7.3m
Indeed, while deal volume has been depressed, deal
value has proved resilient against the pre-Covid
benchmark of $4bn–$5bn per quarter and just below
the long-term average of $7.3bn per quarter.
This further indicates a more mature European SaaS
ecosystem and an increasing share of later-stage
rounds.
EUROPEAN SAAS DEAL ACTIVITY
The 2023 YTD fundraising profile is notably similar to the
mix observed in 2020 and 2019, with a much larger
weighting on smaller capital raises than mega deals (32%
and 7% of value, respectively in 2023 YTD). This proves
that 2021 and 2022 were clear outliers in market activity,
driven by notably high valuations in the SaaS arena and
technology more broadly.
Excluding smaller raises (<$15m), which accounts for the
majority of fundraise volume in each year, each band of
volume and value in 2023 YTD has broadly reset to 2020
and 2019 levels.
2023 YTD SaaS
fundraising split by deal
size has reverted to
pre-Covid trends across
both volume and value
European SaaS Private Placement volume & value 2019-2023 YTD*
PRIVATE PLACEMENT
Sources: GP Bullhound Insights and DealRoom (Q1 2019 – Q3 2023)
Note: * YTD represents 1 January–30 September 2023
40m-100m
100m-250m
250m+
15m-40m
68%
67%
52%
56%
66%
25%
25%
27%
26%
23%
5%
7%
15%
14%
10%
2%
1%
5%
4%
1%
2019
2020
2021
2022
YTD-23
Volume
(excl. <$15m)
213 raises
559 raises
492 raises
241 raises
205 raises
2023 select transactions
36%
36%
20%
21%
32%
21%
22%
13%
16%
23%
19%
21%
18%
17%
20%
12%
15%
24%
23%
18%
12%
5%
26%
23%
7%
2019
2020
2021
2022
YTD-23
$14.2bn
$46.8bn
$44.9bn
$16.7bn
$15.5bn
Value
40m-100m
100m-250m
250m+
0m-15m
15m-40m
Deal size: $250m
App Development
Deal size: $175m
Travel Tech
Deal size: $120m
E-Commerce SW.
Deal size: $129m
Decision Intel.
EUROPEAN SAAS PRIVATE PLACEMENT DEAL ACTIVITY BY SIZE
EUROPEAN SAAS DEAL ACTIVITY
The UK, Germany, and France accounted for nearly
half of all fundraising activity in the European SaaS
ecosystem in YTD 2023 but have also all experienced
significant declines across the year.
Of the most active European markets for fundraising,
the United Kingdom was the hardest hit, decreasing
by 55.8% YoY, with most other geographies
decreasing by c.20%–50%.
In fact, there were only two countries to experience
an increase in deal activity between 2023 YTD and
2022 equivalent: Portugal, which has fostered 63
fundraises thus far in 2023 (compared with 47 in
2022), and Bulgaria.
The UK, Germany and
France have all
experienced a decline
in fundraising volume
of c.50% in YTD 2023
European SaaS private placement volume
(% of deal volume)
Rest of Europe
(44.2%) Growth
22/23 YTD
41.7%
22.9%
13.0%
8.8%
7.2%
6.3%
UK
(55.8%) Growth
22/23 YTD
Germany
(44.9%) Growth
22/23 YTD
France
(54.0%) Growth
22/23 YTD
Spain
(39.2%) Growth
22/23 YTD
Netherlands
(22.0%) Growth
22/23 YTD
YTD-23*
Total deals: 2,460
Growth
22/23 YTD*:
(47.2%)
PRIVATE PLACEMENT
Sources: GP Bullhound Insights and DealRoom (Q1 2019 – Q3 2023)
Note: * YTD represents 1 January–30 September 2023
EUROPEAN SAAS PRIVATE PLACEMENT DEAL ACTIVITY BY COUNTRY
EUROPEAN SAAS DEAL ACTIVITY
Reflective of deal volume, the vast majority of deal
value in the European SaaS market has been driven by
the UK (32%), Germany (16.0%) and France (14.8%).
While the decline in deal volume has been significant,
the decline in deal volume has been even greater, with
four of the top five regions decreasing by over 60%,
which is unsurprising given the complete shift in
macroeconomic conditions between 2023 YTD and its
comparative period in 2022.
UK represents nearly
one third of all
European SaaS
fundraising value in
2023 YTD
European SaaS private placement value
(% of deal value)
UK
(66.6%) Growth
22/23 YTD
31.8%
16.0%
14.8%
5.1%
3.6%
28.7%
Netherlands
(61.8%) Growth
22/23 YTD
Germany
(60.0%)Growth
22/23 YTD
Netherlands
(20.6%) Growth
22/23 YTD
France
(68.0%) Growth
22/23 YTD
Rest of Europe
(65.3%) Growth
22/23 YTD
EUROPEAN SAAS PRIVATE PLACEMENT DEAL ACTIVITY BY COUNTRY
YTD-23*
Total: $14.2bn
Growth
22/23 YTD*:
(64.3)%
PRIVATE PLACEMENT
Sources: GP Bullhound Insights and DealRoom (Q1 2019 – Q3 2023)
Note: * YTD represents 1 January–30 September 2023
Terminology
2023 EUROPEAN SAAS SURVEY
Key SaaS metrics
Terminology
TERMINOLOGY
Customer
acquisition
cost (CAC)
Consists of all the sales & marketing expenses
(staff and non-staff costs) spent to acquire one
new customer
CAC =
S&M Expenditure
# of new paying customers
Gross revenue
retention
(GRR) (%)
Number of customers retained in a given period or cohort
regardless of account expansion or growth

1 – (
Opening ARR − downsell − churn
Opening ARR
)
ARR measures the amount of annually recurring
revenue, or the sum of all revenue derived from
customer contracts over the course of the next
12 months; can serve as an estimate for the
size of a business
Net revenue
retention
(NRR) (%)
Number of customers gained or lost in a given period or
cohort after taking into consideration new, reactivated, or
expanded accounts
1 – (
(ARR beginning of period+
upsell −churn −downsell)
ARR beginng of period
)
Payback period represents the time (months)
taken to fully pay back sales and marketing
investments involved in the acquisition of a
new customer
LTV is a measure indicating the total value of a
customer expected over its lifetime
Payback
period
Annual
Recurring
revenue
(ARR)
Life-time
Value (LTV)
Typically calculated on a cohort basis, excluding customers in trial periods
Source: GP Bullhound Insights
About GP Bullhound
2023 EUROPEAN SAAS SURVEY
Global presence and local expertise for a seamless service
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2023 EUROPEAN SAAS SURVEY
Extensive experience in software with strategics and financial sponsors
Strong global software track record
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ACQUIRED BY
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2023 EUROPEAN SAAS SURVEY
GP Bullhound’s
European SaaS
report team
Alexis Scorer
PARTNER
Alexis.Scorer@gpbullhound.com
Oliver Connick
ASSOCIATE
Oliver.Connick@gpbullhound.com
Robbie Lenigas
ANALYST
Robbie.Lenigas@gpbullhound.com
2023 EUROPEAN SAAS SURVEY
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