1 minute read / Jan 1, 0001 /
A reader asked for an update given the macro changes & the stock market behavior. Here it is:
Multiple = -12.6 + 34.1 x Forward_Growth_Rate + 4.2 x Sales_Efficiency
Some quick definitions:
- Multiple is the forward revenue multiple. Take it and multiply your company’s planned revenue (not ARR) next year & you’ll have an estimate of the value of your business if it were traded in the public markets today.
- Forward_growth_rate: how much the business will grow revenues in the next 12 months
- Sales_Efficiency: (change in gross profit) / sales_and_marketing expense. In other words, how much marginal gross profit did the sales & marketing investment last period generate. This can be calculated quarterly or annually.