In a world where investors are increasingly valuing profitability over growth, we thought it would be worthwhile to do some work on 'what great looks like' as it relates to margin expansion for fast growing, software companies of scale (>$300m in revenue). A thread... (1/10)
We looked at the 23 SaaS companies that listed in the US between 2012 and 2016 and divided them into 3 cohorts based on actual operating margin progression over time. This provided a public market track record to analyse meaningfully. (2/10)
Jun 8, 2022 • 9 tweets • 3 min read
1/ At TDM, as LT investors we often debate what our “through-the-cycle" exit multiples should be. While a few of the older, more experienced members of the team have a long history of investing in SaaS, Tim Le set out to see if the data does in fact support the multiples we use🧵
2/ We analysed 123 listed software companies over the last decade. In 2011, SaaS was still in its infancy with only a small sample of 12 listed companies - the Euro debt crises was in full swing and the business model was both misunderstood and underappreciated.
