Revenue Multiple
What is Revenue Multiple?
A Revenue Multiple expresses company value as a multiple of revenue — for SaaS, valuation divided by ARR — and is the standard shorthand for comparing valuations across private rounds and public comps.
Also known as: ARR Multiple, EV/Revenue
Revenue Multiple Formula
Revenue Multiple = Valuation / ARR | Variable | Meaning |
|---|---|
Valuation | Company valuation (enterprise value for public comparisons). |
ARR | Annual recurring revenue. |
How to Calculate Revenue Multiple
Worked example
- Company Valuation
- $16,000,000
- ARR
- $2,000,000
- → Revenue Multiple (× ARR)
- 8
Revenue Multiple Calculator
Revenue Multiple = Valuation / ARR | Variable | Meaning |
|---|---|
Valuation | Company valuation (enterprise value for public comparisons). |
ARR | Annual recurring revenue. |
Worked example
- Company Valuation
- $16,000,000
- ARR
- $2,000,000
- → Revenue Multiple (× ARR)
- 8
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Common Mistakes with Revenue Multiple
- Benchmarking against headline multiples from a different growth tier: a company growing 100% YoY and one growing 20% do not deserve the same multiple.
- Mixing bases — comparing your ARR multiple to public EV/NTM-revenue multiples without adjusting for forward growth.
Revenue Multiple vs Related Metrics
- Revenue Multiple vs Valuation — how the two differ and when each matters.
Revenue Multiple FAQ
What is a revenue multiple?
A revenue multiple is valuation divided by revenue — in SaaS, usually ARR. A company valued at $16M with $2M ARR trades at 8× ARR. It compresses growth, margin, retention, and risk into one comparable number.
What drives a higher SaaS revenue multiple?
Growth rate above all, then net revenue retention, gross margin, capital efficiency (Rule of 40, burn multiple), and market size. Multiples also swing with the overall rate environment — the same company can command very different multiples in different years.
More questions? See the full Revenue Multiple FAQ.