The Vertical SaaS Profit Premium
Introducing the Euclid Vertical SaaS Index
There are some great general software comp sets out there, from Bessemer’s Cloud Index to Meritech’s SaaS Index. None, however, offer a comprehensive breakdown of vertical software businesses, with a focus on differences from horizontal peers. So we pulled together our own. The Euclid Index we’re sharing today includes 36 leading industry-specific public software companies, alongside 60 horizontal SaaS players for comparison. We’ll aim to update it from time to time and unpack a data-driven vertical SaaS insight top-of-mind to our investment team.
Today, we will discuss a finding from the Index that gets to the heart of the vSaaS business model: the vertical profit premium.
Public Vertical SaaS companies trade at nearly double the EV / Gross Profit multiples of their horizontal peers—11x vs. 5x, on the median. Amongst profitable companies, vertical EBITDA multiples also demonstrate a 10x advantage—44x vs. 34x.
To read the full piece, head over to The Verticalist on Substack.