SaaS Earnings Season Update

News, insights and updates from the team at Bloom Equity Partners

Happy Friday bloom community!

We are back with your favorite weekly newsletter! We are switching things up this week and sharing some public SaaS insights. We’ll be diving into Q2 earning seasons and breaking down these markets further for you folks!

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Now let’s get on with it 🔥

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Q2 SaaS Earnings Season Update

Earnings season is underway and given the market dynamic we thought it would be best to share with you some insights on the public markets. It’s pretty obvious at this point that some weakness is showing up in software. 15% of companies missed revenue estimates for Q2, historically only 5% miss them.

Jamin Ball did a great breakdown on the earnings reports so far so make sure to check it out! Here’s a quick breakdown of what he covered 👇

1. Update on multiples

   • overall median for software companies was 6.7x

   • The top 5 median was 19.7x

   • Here are the top 10 EV/NTM Revenue Multiples

     

   • Break down of multiples by growth rate:

     • (high growth >30% projected NTM growth, mid growth 15%-30% and low growth <15%)

       

2. Important Operating Metrics

   • Median Gross Margin: 74%

   • Median Net Retention: 120%

   • Median CAC Payback: 35 months

   • Median NTM growth rate: 22%

The SaaS market has reset. We've transitioned from a "Capital is cheap, grow at all costs" era to one where every board room is asking "How should we think about top-line growth if we want to conserve cash and prioritize efficiency but still create value?" - Meritech

This sums up the market pretty well. It will be interesting to see how things play out with the changing macro environment and the runoff that will be created in the private markets.

If you enjoyed this quick breakdown make sure to check to give it a share

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What We’re Reading and Listening To…

📚 Demystifying Interest Rates vs. Valuation for High-Growth SaaS

📚 Durable Growth

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Favorites from the Ecosystem

Investors👇…..

Orlando Bravo @OrlandoBravoTB

Those that try to use aggressive tactics to buy a public co from a Board & Mgmt that doesn't want to sell create a lot of drama and, in the end, mostly end up wasting their time. Putting in the effort to build relationships over time is a much better approach.

Justin Vogt @J_M_Vogt

How I measure the effectiveness of proprietary search outreach efforts Combination of: % of owners that are willing to take your call Total number of owners willing to take your call First to make sure the messaging is good and second to make sure you are doing enough outreach

Founders👇…..

Jason ✨2022 SaaStr Annual Sep 13-15 ✨ Lemkin @jasonlk

The #1 mistake I see founders make when they hire their first VP of Sales … Is that the founder stops doing much sales themselves. It doesn’t work that way. Sales almost always goes down as a result. Oftentimes, dramatically so.

Alex Rampell @arampell

1/ How a company I co-founded (TrialPay) once exited the Catch 22 of “can’t raise cash without growth; can’t grow without raising cash” which is potentially the most “unsolvable” (Kobayashi Maru) situation a VC-backed company can face

Operators👇….

Brian Bourque 💎 @bbourque

Should your startup build a marketing team or hire an agency? BOTH. Here's why:

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News from the Industry: deals, deals, and more deals 💰

BV Investment Partners Announces Sale of RKD Group To Incline Equity Partners

iCIMS, Vista Equity Partners and TA Associates Complete Transaction

Private Equity Firm Reinvests in Forterro Five Months After Exit

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End Note 🔚

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About Bloom Equity Partners

Bloom Equity Partners is a lower mid-market software-focused private equity firm, leveraging deep operational and commercial experience to create enduring market value for the benefit of our investors, founders, and their companies.