ARR multiple

Company valuation divided by ARR: how the market prices each recurring dollar. Used instead of price-to-earnings for SaaS because growth-stage companies run at a loss. Retention, growth rate, and efficiency (magic number, gross margin, LTV:CAC) drive the premium a company commands over peers.

ARR Multiple = Valuation / ARR

The multiple is rate-sensitive market weather, not a constant: US SaaS averaged roughly 6x in early 2023 against 15-20x in the low-rate 2021 market.