How can one correlate Tech SaaS firm value to the innovation?

by a searcher from Northwestern University - Kellogg School of Management

Feb 18,2023

I am looking at the SaaS valuations multiples dropping in recent times and that made me think of refining how we value the companies especially in SaaS where product is central to the growth. Turns out most of the value is based off the lagging indicators. I am looking for any tips/directions or any experiences to correlate the product innovation at a SaaS (Enterprise) to the growth and firm value. Revenue and Profitability usually will take care of it if the innovation is efficient and attractive. Are there any measures, methods, numbers, or ratios that anyone has used or can propose? Happy to talk if anyone can.

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searcher from University of Dallas

Look at the cash conversion cycle against the LTV and CAC. Low CAC, High LTV and churn. If all of the last 3 metrics are dropping that's indicative of a product that is working and serving its customers well. Strong proxy for future cashflows as well.

02/24/2023 | like reply | 0 likes

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