Three charts explaining what has happened to SaaS stocks; is a bottom close?
AGC Partners is a middle-market investment bank focused on SaaS (software as a service) companies. Its February update included the following three charts:
Chart 1: The 100 stocks in AGC's SaaS index were trading at an enterprise value to trailing 12 months' revenue ratio of 12x in January 2020. By January 2021 they were trading at 22x trailing revenues, driven by COVID, low interest rates and massive fiscal and monetary stimulus. Now we're back at 12x.









Chart 2: The stocks of less profitable companies fell far more than the stocks of more profitable companies. Of the 100 SaaS stocks in the index, the stocks of the less profitable 50 companies fell by 29% year over year, compared to a drop of only 10% for the more profitable 50. The message: investors want profits now. 






Chart 3: The stocks of the companies with the strongest growth peaked higher, but fell further. Of the 100 SaaS stocks in the index, the stocks of the 50 companies with higher growth are down 22% year over year, compared to a drop of 17% for the 50 with slower growth.






Note the similarity between AGC Partners' chart of unprofitable SaaS stocks with Goldman Sachs' non-profitable tech index.
AGC Partners' SaaS index comprises the 50 largest SaaS stocks by market cap, plus the next 50 high fliers by revenue multiple.

The 50 largest SaaS stocks by market cap in the index are: Adobe (NASDAQ:ADBE), Salesforce (NYSE:CRM), ServiceNow (NYSE:NOW), Atlassian (NASDAQ:TEAM), Snowflake (NYSE:SNOW), Workday (NASDAQ:WDAY), Autodesk (NASDAQ:ADSK), Block (NYSE:SQ), Palo Alto Networks (NASDAQ:PANW), Zoom (NASDAQ:ZM), Datadog (NASDAQ:DDOG), CrowdStrike (NASDAQ:CRWD), Veeva (NYSE:VEEV), Zscaler (NASDAQ:ZS), Okta (NASDAQ:OKTA), Cloudflare (NYSE:NET), DocuSign (NASDAQ:DOCU), HubSpot (NYSE:HUBS), ZoomInfo (NASDAQ:ZI), Paycom (NYSE:PAYC), Bill.com (NYSE:BILL), Confluent (NASDAQ:CFLT), Qualtrics (NASDAQ:XM), RingCentral (NYSE:RNG), Dynatrace (NYSE:DT), NortonLifeLock (NASDAQ:NLOK), PTC (NASDAQ:PTC), Fair Isaac (NYSE:FICO), Xero (OTCPK:XROLF), Zendesk (NYSE:ZEN), Ceridian (NYSE:CDAY), SentinelOne (NYSE:S), Bentley (NASDAQ:BSY), Paylocity (NASDAQ:PCTY), Coupa Software (NASDAQ:COUP), Dropbox (NASDAQ:DBX), Avalara (NYSE:AVLR), Asana (NYSE:ASAN), GitLab (NASDAQ:GTLB), Monday.com (NASDAQ:MNDY), Five9 (NASDAQ:FIVN), Procore (NYSE:PCOR), Elastic (NYSE:ESTC), Pegasystems (NASDAQ:PEGA), Smartsheet (NYSE:SMAR), New Relic (NYSE:NEWR), Anaplan (NYSE:PLAN), Workiva (NYSE:WK), Nutanix (NASDAQ:NTNX) and Freshworks (NASDAQ:FRSH).




The 50 other stocks in the index are: Tenable (NASDAQ:TENB), BlackLine (NASDAQ:BL), Qualys (NASDAQ:QLYS), Altair (NASDAQ:ALTR), Paycor (NASDAQ:PYCR), Squarespace (NYSE:SQSP), nCino (NASDAQ:NCNO), KnowBe4 (NASDAQ:KNBE), Amplitude (NASDAQ:AMPL), Jamf (NASDAQ:JAMF), Darktrace (OTCPK:DRKTF), Varonis (NASDAQ:VRNS), Alteryx (NYSE:AYX), Kinaxis (OTCPK:KXSCF), Sprout Social (NASDAQ:SPT), SailPoint (NYSE:SAIL), Q2 (NYSE:QTWO), Instructure (NYSE:INST), EngageSmart (NYSE:ESMT), Duck Creek (NASDAQ:DCT), Clearwater (NYSE:CWAN), PagerDuty (NYSE:PD), Sprinklr (NYSE:CXM), Momentive (NASDAQ:MNTV), C3.ai (NYSE:AI), Olo (NYSE:OLO), JFrog (NASDAQ:FROG), EverCommerce (NASDAQ:EVCM), BigCommerce (NASDAQ:BIGC), Expensify (NASDAQ:EXFY), Vimeo (NASDAQ:VMEO), Definitive Healthcare (NASDAQ:DH), Vertex (NASDAQ:VERX), Zuora (NYSE:ZUO), Everbridge (NASDAQ:EVBG), Disco (NYSE:LAW), Docebo (NASDAQ:DCBO), Blend (NYSE:BLND), Ping Identity (NYSE:PING), Domo (NASDAQ:DOMO), WalkMe (NASDAQ:WKME), VTEX (NYSE:VTEX), Sumo Logic (NASDAQ:SUMO), Alkami (NASDAQ:ALKT), Intapp (NASDAQ:INTA), ForgeRock (NYSE:FORG), Yext (NYSE:YEXT), UserTesting (NYSE:USER), Enfusion (NYSE:ENFN), and Upland (NASDAQ:UPLD).