Khan: Revenue multiples work for SaaS, but not delivery or consumer firms
Imran Khan · Imran Khan: Why the IPO Market is Not Closed & Lessons From Taking Snap & Alibaba Public | E1194 · 20VC with Harry Stebbings · Aug 26, 2024 · at 15:36
Imran Khan, CIO of Proem Asset Management and former Snap CSO, clarifies where revenue multiples can validly be applied in valuation models.
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“It's totally fair to look at SaaS business that way, because SaaS business, you know, many of the SaaS business has very high gross margins, and they have a very, very high profit margins at a steady state basis. So you can predict the cash flow Based on the contractual revenue. So unless there's a disruptive software comes out, it makes sense to a revenue multiple. But a delivery company, you know, or a consumer company giving revenue multiple doesn't make a lot of sense.”
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