Glossary term
ARR Multiple
Enterprise value divided by ARR; SaaS valuation shorthand that compressed from 30x+ in 2021 to roughly 8-15x by 2024-26.
ARR Multiple is enterprise value divided by annual recurring revenue, the shorthand by which SaaS companies are valued. The metric compressed dramatically from 30x+ at the 2021 peak to roughly 8-15x by 2024-26, as higher rates and the agentic-disruption thesis repriced the durability of recurring revenue. The multiple is the clearest market signal of how SaaS growth expectations have reset. See SaaSpocalypse 101.