SaaS Valuation Calculator

How to value a SaaS company with an ARR multiple

SaaS companies, especially those still growing fast or not yet steadily profitable, are usually valued as a multiple of recurring revenue rather than earnings. Recurring revenue is predictable, and for a growing company today's profit says little about tomorrow's. The method takes four steps:

1. Calculate ARR. Current MRR x 12, counting only recurring subscription revenue. Leave out one-time setup fees and services. See ARR.
2. Choose a multiple. Start from comparable companies or recent deals, then adjust for your growth, retention, margins and size.
3. Multiply ARR by the multiple to get enterprise value, the value of the operating business.
4. Add cash and subtract debt to get equity value, the part that belongs to shareholders.

Worked example

A B2B SaaS company has $3M in ARR, grew ARR 40% over the last year, holds $1.5M in cash and owes $0.5M.

• Default multiple: 40% growth falls in the calculator's 20–50% band (4x to 7x), so it uses the midpoint, 5.5x.
• Enterprise value: $3M x 5.5 = $16.5M, with a range of $12.0M to $21.0M.
• Equity value: $16.5M + $1.5M - $0.5M = $17.5M.

Now the conservative case. Software Equity Group put the median private SaaS M&A deal at 4.0x trailing revenue in 2Q26. Entering 4 as the override gives an enterprise value of $12.0M and an equity value of $13.0M. That is $4.5M less than the default estimate, which is why it pays to run both.

ARR multiples vs revenue multiples

Market data is often quoted as EV/revenue, using trailing twelve months (TTM) or next twelve months (NTM) revenue, while this calculator multiplies current ARR. The SaaS Capital Index, for example, uses annualized current run-rate revenue rather than trailing or projected revenue.

The difference matters for a growing company. Its current ARR is higher than the revenue it booked over the last twelve months, so the same price is a lower multiple of ARR than of trailing revenue. A 4.0x TTM multiple for a company growing 40% translates into a noticeably lower ARR multiple. Compare like with like.

Common SaaS valuation mistakes

• Anchoring on peak-market multiples. Multiples from 2021 are not a guide to today. Bessemer reported that the average Cloud 100 multiple climbed from 9x in 2016 to 34x in 2021, and medians in 2026 are a fraction of that.
• Counting non-recurring revenue as ARR. Setup fees, services and one-off usage spikes do not earn a recurring revenue multiple.
• Picking the wrong comparables. Public multiples move daily with the stock market, while private deal multiples depend on deal size and buyer. Use data close to your size and situation.
• Ignoring retention and margins. Two companies with the same growth can be worth very different amounts if one keeps its customers and the other replaces them.
• Confusing enterprise value and equity value. Founders are paid out of equity value, after debt.
• Treating the result as a price. Real valuations are negotiated, and terms such as earn-outs, stock consideration and working capital adjustments change what you actually receive.

What are SaaS valuation multiples in 2026?

2026 has been a weak year for SaaS valuations. Recent published medians:

Aventis Advisors notes that its Q1 2026 private figure rests on a small number of deals, so treat it as an indication. The calculator's default bands (from 2–4x for slow growers to 10–20x for companies doubling every year) sit well above these medians. They are broad rules of thumb that reflect a richer market, so read the default result as an upside case and the override with a current median as the conservative case.

What moves the multiple

• Growth. The single biggest driver. Buyers pay for future revenue, and growth tells them how much of it there will be.
• Net revenue retention. SaaS Capital's 2025 survey found that companies with the highest NRR grew at twice the median rate of 24%, which is why investors look at retention almost as closely as growth.
• Profitability. Aventis found that profitable public SaaS companies traded at a median 7.8x revenue versus 6.7x for unprofitable peers in early 2023. In Q2 2026, only 7 of the 46 public SaaS companies in its sample that reported both figures (15%) cleared the Rule of 40, and the median score was 26%.
• Gross margin. A higher gross margin means more of each revenue dollar can become profit at scale.
• Risk. Customer concentration, high churn and unreliable metrics all push the multiple down in due diligence.

How this calculator works

• Enterprise value is ARR multiplied by the multiple. If you enter a multiple, the calculator uses it and shows a range of 0.8x to 1.2x of it.
• Without an override, it picks a band from your growth rate: under 20% growth uses 2–4x (midpoint 3x), 20–50% uses 4–7x (5.5x), 50–100% uses 7–12x (9.5x) and 100% or more uses 10–20x (15x). With no growth rate either, it uses 5x with a 3–7x range.
• Equity value is enterprise value plus cash minus debt.
• Limitations: the growth bands are broad rules of thumb. They do not account for retention, margins, profitability, size, category or the market on the day you sell, and they sit above 2026 medians. For a conservative case, override the multiple with current comparable data. This is an estimate for planning, not a formal valuation or financial advice. The math runs in your browser.

Related metrics and guides

• EV/revenue multiple, how the market prices revenue
• Enterprise value and ARR
• Revenue growth rate and net revenue retention, the two biggest multiple drivers
• Rule of 40, how buyers weigh growth against profit
• M&A readiness, preparing your metrics for a sale

Check the inputs buyers look at first with the Rule of 40 calculator and the NRR calculator.