For more than a decade, SaaS had one of the simplest narratives in venture capital. If a company was growing revenue quickly and building predictable recurring revenue, investors were willing to assign very high valuation multiples.
Growth was the primary signal the market cared about, and for years that was enough.
But the past few years have fundamentally changed how public markets price software companies.
I built a dashboard trackingvaluation multiples across 71 public tech companies since 2021, and the data tells a clear story.
The Headline Numbers
Across the dataset, the compression in software valuations has been significant.
• Median EV/Revenue multiple:8.1x today, down from17.4x at the peak
•52% median multiple compressionsince 2021
• Median revenue growth across companies:23.3%
• Median Rule of 40 score:41.7
• Median operating margin:-2.0%
In other words, many public software companies are still growing at healthy rates and meeting Rule of 40 standards. What changed is not growth itself. What changed is how investors value that growth.
The bigger story is not just compression. It is where capital moved.
The data shows a dramatic rotation across tech sectors.
•Cloud Infrastructure:14.4x → 8.0x median multiple
•Semiconductors:5.8x → 19.3x median multiple
• SaaS multiples compressed significantly
• Fintech and Consumer Internet quietly re-rated higher
Semiconductors are the clearest example. Multiples tripled almost entirely due to the AI infrastructure cycle.
Meanwhile many traditional SaaS companies saw their valuation frameworks reset.
The Spread Between Winners and Losers
Another striking pattern in the data is how wide the outcomes have become.
• Best stock since 2020:+1,108%
• Worst stock since 2020:-89%
• Total spread between best and worst performer:1,197 percentage points
Public tech is no longer moving as a single category. Individual companies are diverging dramatically based on growth durability, profitability, and AI exposure.
Onlyfour companies maintained EV/Revenue multiples above 15x every year:
• Snowflake
• CrowdStrike
• Nvidia
• ARM
All four sit directly in the AI infrastructure ecosystem.
Individual Company Moves
Several companies illustrate how dramatically narratives can change.
•Spotify:1.4x → 7.0x EV/Revenue (+401%)
•Meta:2.2x → 7.2x after the “year of efficiency” reset
•Bill:16.8x → 3.7x (-78%)
•Nvidia:peaked at54x EV/Revenue, the highest multiple among large public tech companies since 2023
These shifts highlight how quickly markets can reprice companies when growth expectations change.
What Actually Happened
If you look only at the overall market median, the change appears modest.
• 2021 median:6.4x
• 2023 median:8.3x
• Today:~7.0x
But beneath that surface, capital rotated aggressively across sectors.
The ZIRP era rewarded growth at almost any cost.
The current market rewards a different mix:
• efficiency
• operating discipline
• exposure to the AI infrastructure cycle
The SaaS model itself did not break. Recurring software revenue remains one of the most attractive business models in technology.
But the valuation environment around SaaS has become much more selective.
Markets are no longer pricing software companies as a single category. Instead, they are separating companies based on efficiency, profitability, and how directly they participate in the AI economy.
That shift is visible clearly in the data.
71 companies
8 sectors
590 data points
Full dashboard with interactive charts and sortable heatmap:
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