Clare Capital produces a free, weekly two-page, graphic-heavy technology insights report on a range of topics from acqusitions to metrics to multiples.
See attached some previous examples of our weekly technology insight reports:
If you would like to be added the distribution list. Email Rhys Whiting at firstname.lastname@example.org
As always, questions, comments and new subscribers are all welcome.
Clare Capital advised Software-as-a-Service (SaaS) business ProActive Software on its sale to ELI Global.
ProWorkflow, the product behind ProActive Software, is a fully featured project management, workflow and time management tool, supplied as a SaaS solution.
Clare Capital advised IT tertiary provider Computer Power Plus (a joint venture between Whitireia NZ and WelTec) on its sale to Whitecliffe Enterprises.
Computer Power Plus is a specialist IT training institute that provides a wide of range of NZQA approved IT programmes from Certificate to Advanced Diploma level.
A copy of the Press Release can be found here: https://www.whitecliffe.ac.nz/news/computerpowerplus/.
Clare Capital is pleased to announce it advised Touchtech on its merger with Springload.
Touchtech is a product design and engineering studio building web and mobile applications. Springload creates websites and apps that improve businesses and people’s lives. The combined business is now the largest independently owned digital agency in Wellington, with 70 staff.
A copy of the Press Release can be found here: https://touchtechlabs.com/insights/touchtech-springload-merger/
Clare Capital is pleased to announce it advised COMSMART on its sale to Fortlock Holdings.
COMSMART is an IT services company based in Wellington (NZ). It services include:
- Consulting – business and data analysis, performance monitoring, roadmap planning.
- Professional Services – design, architecture, project management, implementations, site audits and project work.
- Managed Services – maintenance and support through Service Level Agreements and T&M based Service Desk support.
- Product Sales – hardware and software sales to regular customers as well as the general public.
- Recruitment – sourcing the right people for customer’s internal IT resource requirements.
This is the fifth deal Clare Capital has completed in the last twelve months.
A copy of the Press Release can be found here: http://www.scoop.co.nz/stories/BU1711/S00884/fortlock-group-acquires-comsmart.htm
Since July, Clare Capital has been producing a weekly, two-page Tech Update incorporating different charts and listed company analysis for our distribution list. The Updates have included:
- SaaS Revenue per Employee;
- Remuneration vs Performance;
- Capital Used vs Recurring Revenue;
- Cash Burn & Runway; and
- The 40% Rule (which was highlighted by Michael O’Donnell in an October Stuff article).
On the back of the first FounderCon, which Clare Capital sponsored, we have released the Complete Series of Tech Updates #1-17 [this link takes you to the full report] on our Blog and on the ShowGizmo app.
Please feel free to download and share around with anyone who you think would find it useful.
Contact us if you would like to be on the distribution list.
Not all revenue multiples are equal.
99%> of the time EV/ARR multiples should be greater than EV/Forward Revenue multiples, it is therefore very important to understand the difference between the two.
In both of these multiples, the Enterprise Value (EV) remains constant, it is the measure of revenue that is changing. Annualised Recurring Revenue (ARR) is the current Monthly Recurring Revenue multiplied by 12, whereas the Forward Revenue is the total forecasted revenue for the next financial year. Assuming the company is growing, then Forward Revenue will always be higher than ARR and therefore, EV/Forward Revenue will always be lower than EV/ARR.
The relationship between EV/Forward Revenue and EV/ARR is explained by growth. The faster a company is growing the bigger the difference between EV/ARR and EV/Forward Revenue multiples.
Is profitability, or, at least, a path to profitability, becoming more of a factor in valuation multiples for SaaS companies?
Recently there has been considerable coverage of how median valuation multiples have fallen for publicly listed SaaS companies and the impact that this is having on multiples employed by private companies. To add to this debate Clare Capital has analysed the annual change in Forward Revenue Multiple for 73 public SaaS companies.
From this dataset, more than 80% of the companies (60) have experienced a reduction in valuation multiple and as a group the median valuation multiple has fallen by more than a quarter for the annual period (other SaaS commentators have been highlighting even larger declines, for example, see Tomasz Tunguz‘s blog post on the decline in SaaS Valuations).
Following a few twitter conversations between our own Mark Clare, technology commentator & investor Ben Kepes, corporate finance associate Sam Stewart and Mindscape CEO JD Trask, Clare Capital charted key EV and Revenue metrics for 50 listed SaaS companies with the results below: