SaaS Valuation Multiples 2025: Benchmarks by ARR & Growth

By Amanda White | September 22, 2025

TL;DR: Buyers still price SaaS off EV/ARR first, then move the multiple up or down based on growth, revenue quality, and capital efficiency. Use the tables below as directional private-market ranges in 2025—then adjust with the uplift/discount factors.

What we mean by “EV/ARR”

• Enterprise Value (EV): equity value + debt − cash.
• ARR: contracted, recurring subscription revenue normalized to a 12-month run rate (exclude one-off services, pilots, and promos you won’t renew).
• EV/ARR multiple: the headline figure most buyers, bankers, and brokers anchor on for sub-$100M ARR SaaS.

Benchmarks by ARR (baseline economics)

Assumes 75–85% gross margin, CAC payback ~12–24 months, NDR ~105–115%, balanced acquisition mix, and “clean” financials. Use growth adjustments in the next section.

Why ARR size matters: scale lowers perceived risk (logo base, onboarding costs, management depth) and usually improves revenue quality (stickier customers, better cohorts).

Growth adjustments (stack on top of ARR band)

Choose your growth bucket (YoY). Add or subtract from the baseline range.

Tip: Many buyers also sanity-check with Rule of 40 (Growth % + FCF margin). Over 40 generally supports the high end of your range; under 20 pushes you down.

Uplifts & discounts buyers actually use

Think of these as levers that slide you within—or outside—the range.

Uplifts

• Net Dollar Retention (NDR) ≥120%: +0.5× to +2.0×
• CAC Payback ≤12 months or Magic Number ≥0.8: +0.5× to +1.5×
• Gross Margin ≥85% (limited services, efficient infra): +0.5× to +1.0×
• Annual prepay adoption ≥70% (low churn): +0.5× to +1.0×
• Profitable or near-breakeven (FCF ≥0%): +0.5× to +1.5×

Discounts

• Heavy services mix (>20% of revenue): –0.5× to –1.5×
• High churn / NDR ≤100%: –1.0× to –3.0×
• Customer concentration (top 10 >40% of ARR): –0.5× to –2.0×
• Price-cut dependence / discount sprawl: –0.5× to –1.0×
• Unclear IP / compliance gaps (SOC 2/ISO): deal friction + lower end of range

Vertical nuance (quick guide)

Vertical SaaS (healthcare, legal, gov, fintech): usually +0.5× to +2.0× for durability and niche moats—if sales cycles and compliance are under control.

Horizontal team tools: broader TAM, but more competitive; rely on growth & NDR to earn uplifts.

AI-heavy cost structure: buyers will inspect gross margin and unit economics closely; stellar NDR can offset GPU/infra drag.

How to apply the benchmarks (5-minute method)

1. Pick your ARR band from the first table.
2. Adjust for growth using the second table.
3. Apply 2–4 levers from the uplift/discount lists.
4. Cross-check with Rule of 40 to land high/low in the range.
5. Multiply the final EV/ARR by your clean ARR (back out one-offs & promos) to estimate EV.

Worked examples

Example A — $4M ARR, 45% growth, NDR 118%, CAC payback 14 mo

Base (3–5×) → Growth (+1 to +3×) → Uplifts (+0.5 to +1×). Indicative: 4.5× – 8.0× EV/ARR → $18–32M EV.

Example B — $12M ARR, 22% growth, services 25%, NDR 102%

Base (5–8×) → Low growth (no change) → Discounts (–1.5 to –3×). Indicative: 2.0× – 6.5× → $24–78M EV (likely mid-range given services mix).

Example C — $28M ARR, 62% growth, NDR 128%, GM 86%, FCF –2%

Base (6–9×) → High growth (+3 to +5×) → Uplifts (+1 to +2×). Indicative: 10× – 16× → $280–$448M EV (premium profile).

Clean ARR: what to include (and exclude)

• Include: active subscriptions at current price, expected expansions baked into contracts.
• Exclude: setup fees, pilots, non-recurring services, usage spikes unlikely to repeat, any discounts you won’t renew.
• Normalize: convert MRR → ARR, remove FX noise, annualize partial-year upsells fairly.

Common questions

What’s a “good” EV/ARR in 2025? For sub-$20M ARR with solid but not breakneck growth, 4–8× remains a realistic private-market band. Premium assets with elite NDR and efficiency go higher; low-growth, service-heavy products go lower.

EV/ARR vs EV/Revenue? Use EV/ARR for pure subscription businesses; use EV/Revenue (blended) if services are >20% of revenue or usage volatility is high.

Does profitability always help? Yes—especially with balanced growth (Rule of 40 ≥40). It de-risks the plan and expands buyer pools (PE as well as strategics).

Public SaaS baskets set the tone for risk appetite; private deals follow with a lag. Even when markets swing, growth quality (NDR, payback, margin) is your controllable lever.

Quick checklist to push your multiple up

• Raise NDR (expansion pricing, tier packaging, success motions).
• Shorten CAC payback (onboarding, PLG assists, better targeting).
• Improve gross margin (cloud/LLM efficiency, reduce services).
• Tighten discounting and contract terms (annual prepay, price escalators).
• Close SOC 2/ISO gaps and clean data room early.