---
title: "The Correction in SaaS Company Valuations"
description: "Analyzing the 23% decline in SaaS valuations: Why the market correction isn't as dramatic as it seems, backed by data showing 21% nine-month growth."
categories: ["SaaS","benchmarks","data analysis"]
keywords: ["SaaS valuations","SaaS market correction","Tomasz Tunguz","venture capital","data analysis","LogMeIn","Rally Software","Jive","Enterprise Value-to-Revenue multiple","public SaaS market"]
ai_summary: "Explores the 23% decline in SaaS valuations and reveals a 21% growth in value over nine months, challenging market perceptions."
date: 2014-04-09
lastmod: 2026-07-30
canonical_url: https://www.tomtunguz.com/the-correction-in-saas-company-valuations/
author: "Tomasz Tunguz"
---
If you visit Yahoo Finance today, type in the ticker of every SaaS stock, copy and paste the image into a document, you might create a chart that looks like the one above. A cursory glance at the plunging lines in most of these names might send you into a panic, only to tweet in alarm that the bottom is falling out of the SaaS market. Chicken little. Chicken little.
The problem with the chart above is the y-axis. In the chart above, the data isn't presented with the right perspective. The y-axis should go to zero at the bottom. Below is a chart that accurately shows the trends. Far less alarming.
Nevertheless, there seems to be a correction impacting the public SaaS market. The median SaaS stock has fallen 23% from its high over the past 9 months. Every stock but LogMeIn has fallen in that period. Notably, Rally Software has fallen by 54% and Jive by about 56%.
Despite this recent downward pressure, these SaaS companies have actually increased their value in the trailing nine month period by 21%, on average. Additionally, SaaS companies still command a 9x Enterprise Value-to-Revenue multiple, likely one of the most generous multiples of most sectors in the market.
Whether this correction is a short term, aberration or long-term repricing is challenging to say. Regardless, SaaS companies are still darlings of the public markets.