SaaS Valuation Multiples in 2026: What Software Companies Are Really Worth Now

When I wrote The Subscription Playbook, Snowflake was the poster child for usage-based software.

It had net dollar retention of 158%. Revenue was growing 121% a year. It reached a valuation of $92 billion with its IPO.

Four years after the book came out, almost everything about the software market has changed. Multiples have collapsed. AI has investors questioning whether software companies will survive at all.

And Snowflake? In the September 2026 SaaS Capital Index data, it was still one of the five most highly valued companies in the index, at 19x run-rate revenue.

That tells you most of what you need to know about SaaS multiples in 2026. The average has fallen a long way. But the market still pays very well for growth and retention. It's just paying for less of everyone else.

Here's the data.

What are SaaS multiples today?

The SaaS Capital Index tracks US-listed B2B SaaS companies and measures their value against annualized current run-rate revenue. It excludes consumer SaaS, companies with very low revenue per customer, and companies with large non-SaaS revenue streams. That makes it one of the cleaner benchmarks for a private B2B software business.

I downloaded the monthly data for this guide. Here's 2026 so far.

June's 3.1x was the lowest reading since September 2011.

SaaS Capital's April 2026 commentary put it bluntly: valuations "hit decade-plus lows in Q1 2026 as markets priced in AI as an existential threat." Growing concern about AI "catalyzed a sharp re-rating lower."

How have SaaS multiples changed since 2021?

Three distinct periods stand out:

1. 2021: the peak. Low interest rates and lockdown-era growth pushed multiples to historic highs. That's when Salesforce paid about 26 times Slack's projected revenue.
2. 2022 to 2025: the plateau. Multiples reset to the 6x to 7x range and mostly stayed there until late 2025.
3. 2026: the AI shock. Investors marked down software on fears that AI would replace it, or cut the seats it's sold by.

If someone quotes you a multiple, ask which of those three worlds it came from.

How do multiples change with growth?

Using the September 2026 index data, I grouped the 58 companies that had both a valuation multiple and a revenue growth rate.

The median growth rate across those companies was about 13%, which matches SaaS Capital's observation that index growth has fallen from above 30% in 2021 to the low teens.

The top band is just five companies, so don't treat 19x as a benchmark. But the shape is the point. Going from single-digit growth to 20% growth roughly doubles the multiple.

Do profitable SaaS companies get higher multiples?

It's more nuanced than you might expect. Here's the same data grouped by Rule of 40 score (growth rate plus profit margin).

Companies scoring under 20 are clearly penalized. Above 20, the sample of companies scoring 40-plus is too small to say they're valued higher. In this dataset, growth explains more of the multiple than profit does.

For a private business, I'd read that as: profitability protects you from the bottom of the range, while growth and retention move you to the top.

What's the spread between the best and worst?

Enormous.

The top of the list is mostly security and data infrastructure: software that customers can't do without, and whose usage grows naturally. The bottom is companies with slow growth, falling revenue or heavy debt.

A median tells you where the middle is. Your business could sit anywhere on that spread.

What multiples do private SaaS companies get?

Private companies usually trade below public ones. They're smaller, riskier and you can't sell their shares on an exchange tomorrow.

The best recent public estimate comes from SaaS Capital's 2025 model. When the public index stood at 7.0x, it predicted 4.8x for bootstrapped private SaaS companies and 5.3x for equity-backed ones. That's about 70–75% of the public multiple.

If you apply a similar ratio to the September 2026 public median of 4.2x, you get something around 3x run-rate revenue for a typical private B2B SaaS company. That's my extrapolation, not a published figure. A private company with strong growth and retention can beat it comfortably. A small, founder-run one will often be valued on profit instead.

What multiples do AI companies get?

This is the strangest part of the 2026 market. While the median SaaS multiple hit decade lows, some AI-native companies raised money at multiples not seen since 2021.

Three cautions before you use these.

1. They're venture rounds, not sales. Investors bought minority stakes, usually with preference rights, betting on growth that most companies never achieve.
2. Growth was extraordinary. Lovable, for example, said its ARR had nearly tripled from $200 million. That's not the same business as a SaaS company growing 15%.
3. Margins are different. AI products pay for compute every time a customer uses them, so AI gross margins can be well below classic SaaS. Buyers will eventually price that in.

The full stories are in the Cursor and ElevenLabs case studies, and the $100M ARR class of 2026 report covers how the fastest growers price.

Why are SaaS multiples higher than for industrial companies?

Because a dollar of SaaS revenue usually carries:

• higher gross margin, so more of it becomes profit at scale;
• more predictability, because it renews automatically;
• compounding, because new customers add to the base and existing ones can expand;
• lower capital needs, because growth doesn't require factories or inventory.

In the book I wrote that a higher gross margin means a higher price-to-revenue multiple. That's still true. It's also why AI products with lower margins may not hold their multiples once growth slows.

Which revenue is the multiple based on?

This catches people out all the time.

A company worth $40 million with $8 million TTM revenue and $10 million of ARR is "5x TTM" and "4x ARR" at the same time. Both are true. Only compare like with like. My guide to ARR covers how to calculate it honestly.

How do you apply a multiple to your own business?

1. Calculate clean ARR: recurring only, excluding one-off fees and sales tax.
2. Start with a current benchmark: the public median, adjusted down for private company risk.
3. Adjust for growth: use the growth bands above as a guide.
4. Adjust for retention: NRR above 100% supports a premium; high churn pulls you down.
5. Adjust for margin, size and risk: concentration, founder dependence, legal exposure.
6. Cross-check on profit: does the implied EBITDA multiple make sense for your likely buyer?

The full method, with a worked example, is in how to value a SaaS business. The 2026 benchmarks page shows how your growth and retention compare.

When do multiples mislead?

• When the business isn't really SaaS. Services revenue doesn't earn software multiples.
• When the data is old. A 2021 multiple applied in 2026 is a fantasy.
• When the comparison is a funding round. Minority stakes and acquisitions aren't priced the same way.
• When the multiple is on the wrong revenue. Check run-rate vs TTM vs NTM.
• When it ignores debt and cash. Enterprise value and equity value differ.

For Australian founders, there are local wrinkles too: GST, R&D refunds and the 2027 changes. See valuing an Australian SaaS business.

What to do next

Work out your growth rate, NRR and gross margin, then put them into the estimator to see roughly where your business sits on the spread.

For the bigger picture of how valuation works, start with valuing a subscription business.

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Frequently asked questions

General information only, current as at October 2026. It isn't legal, tax or financial advice and doesn't consider your circumstances. Speak to a qualified adviser before acting.

Robert Coorey, MBA

Robert is the author of The Subscription Playbook and Feed a Starving Crowd and a Director at BPAG Accountants in Sydney. More about Robert.