2020 Review: SaaS IPOs


Alex Clayton

Dec 29, 2020

2020 has been a year to remember for SaaS IPOs, and it's even more impressive it all happened in around six months in the midst of a global pandemic. I did a post this past year on the 2019 cohort of IPOs and will evaluate the metrics and KPIs of the 2020 cohort. The COVID-19 pandemic sent the global markets into a nosedive in March and IPOs stalled during the first half of the year. The IPO window didn't close for long and it was one of the busiest second halves of the year for SaaS companies in history. The chart below shows the number of SaaS IPOs by month and the associated logos.

Source: Company filings. *Meritech is an investor in JFrog and Snowflake.

Similar to last year, before getting into the 2020 cohort, how has the 2019 cohort performed over the past year? Out of the 12 SaaS companies I covered in last year’s post, every single company has seen its value increase dramatically since their IPOs. One company, Slack, announced they signed a deal to be acquired by Salesforce (it's still included here as the deal has not closed). The median increase in market cap from these companies is 270% from their IPO → today. The chart below shows market cap at IPO vs. today, sorted from highest --> lowest market cap as of each company's IPO. Zoom alone is up over 1,000% from their IPO.

Source: Public Wall Street Research, company filings and S&P Capital IQ. Market data as of 28-Dec-2020. *Meritech is an investor in DDOG.

This next chart looks at each company's enterprise value / NTM (next-twelve-months) revenue as of my post a year ago and today's. The median increase in multiple for this group of companies has been 63%. Most of the increase in market cap is due to their revenue growth over the past 1+ years, even though most multiples have expanded. Interestingly, Zoom’s multiple is actually down from my last post while they have grown their market cap by over 1,000%.

Source: Public Wall Street Research, company filings and S&P Capital IQ. Market data as of 28-Dec-2020. *Meritech is an investor in DDOG.

Now, on to the 2020 cohort of SaaS companies, of which there were 16. There were significant variations in the types of SaaS companies that went public; over the past few years most of the businesses were venture-backed but this year there were more private equity-owned businesses as well as older software companies. For example, Vertex and Bentley Systems were founded in 1978 and 1984, respectively. Given the broad interest in technology this year -- and particularly strong public market interest in SaaS businesses -- it’s no surprise that these older companies took advantage of the 10-mile-wide open IPO window. As I’ve mentioned before, there has been no better time for a SaaS company to go public than in 2020. Two SaaS companies this year went public through direct listings, Asana and Palantir. Given the SEC just announced companies can now add primary capital to direct listings, direct listings could become the standard for how SaaS companies enter the public markets. I bet we see many direct listings next year.

Just as I did for the 2019 cohort, this post will cover benchmarking and descriptions of the stats and KPIs that should give you a picture of what you would have needed to make it public as a SaaS company in 2020. For deeper dives into specific companies, see other S-1 breakdowns here. To see many of these same metrics and more for all current public SaaS companies, click here. Procore, which I covered here, was not included in the following analysis as the company has yet to start trading.

Years from Founding to IPO

Firstly, how long did it take to IPO? The below chart has years from founding to IPO year -- the median is 13 years. Note the scale of these companies varies widely (more in next section).

Source: Company filings

LTM (last-twelve-months) Total Revenue at IPO Quarter ($M)‍

All of these companies have meaningful scale -- the median LTM revenue is $211M.

Source: Company filings


Less than 40% of the SaaS IPOs in 2020 were based in Silicon Valley. Palantir recently disclosed they were relocating the company to Denver, CO. The trend of IPOs outside of Silicon Valley is not surprising -- talent and innovation are distributed, particularly in a COVID world with Zoom. At Meritech, many of our investments are based outside Silicon Valley and we expect to see many more IPOs from non-Silicon Valley companies.

Source: Company filings

Total Revenue YoY % Growth Rate at IPO Quarter

Given the diversity of types of companies; private equity-owned, venture-backed and 40+-year-old companies, the revenue growth rates diverge significantly. The median revenue growth rate at IPO quarter was ~40%.

Source: Company filings

LTM (last-twelve-months) Subscription / Recurring Revenue as a % of Total Revenue‍

While all have subscription models, 4 have ~100% of their revenue as subscription or recurring in nature. The below benchmarks LTM subscription or recurring revenue as a percent of total revenue. The median is 94%. Note that Unity was not included given they do not have a subscription or recurring revenue line item. Moreover, Palantir does not disclose professional services as a part of their revenue model, but it appears that most of their revenue is recurring in nature, irrespective of whether it’s from software or services. Duck Creek is also going through an on premise to SaaS transition and subscription revenue is only ~37% of LTM revenue.

Source: Company filings

Implied ARR at IPO Quarter ($M)‍

A few of these companies report ARR (annual recurring revenue) or it can be derived by multiplying quarterly subscription revenue * 4. If a company only disclosed ARR for a certain period, quarterly subscription revenue * 4 was substituted for apples-to-apples comparison purposes. The median is $208M.

Source: Company filings. Unity not included as they do not have a subscription / recurring line item.

‍Implied Net New ARR at IPO Quarter ($M)‍

The chart below benchmarks how much net new implied ARR each company added at IPO quarter. The median net add is ~$17M.

Source: Company filings. Unity not included as they do not have a subscription / recurring line item.

LTM (last-twelve-months) GAAP Gross Margin‍

Moving on to the P&L: the median gross margin for this group is ~72%.

Source: Company filings

‍LTM (last-twelve-months) GAAP Operating Margin‍

As expected, almost every company is losing money on an operating-basis and only four made money on a GAAP-level in the past year. The median LTM GAAP operating margin was ~(14)%.

Source: Company filings

Dollar-based Expansion / Net Dollar Retention at IPO Quarter

Expansion is a critical KPI for SaaS companies and while some of these businesses have slightly different definitions, they’re benchmarked below. The median is 115%. Note that Palantir, Agora, and do not disclose this metric.  

Source: Company filings

Sales Efficiency: Implied Months to Payback

It’s hard to benchmark precise customer acquisition costs since most companies don’t report new customer adds per quarter, but it’s possible to standardize and find the months to payback using the inverse of a CAC ratio (implied net new ARR * gross margin / sales and marketing spend of prior quarter), which is outputted below for each company. The numbers vary widely and the median implied months to payback is 25.

Source: Company filings. Unity not included as they do not have a subscription / recurring revenue line item.

Average Subscription Revenue per Customer (Average ACVs or Annual Contract Value) at IPO Quarter

Public companies typically don’t report detailed customer segment information so it’s hard to know exactly how much all their customers are paying, but we do have averages. The below benchmarks annualized subscription revenue over total customers at IPO quarter. Palantir and really skew the numbers and have the two highest averages of any of the previous 90+ SaaS companies to file S-1's. The median is $71.1K.

Source: Company filings. Unity not included as they do not have a subscription / recurring revenue line item.

Total Full-time Employees (FTEs) at IPO Quarter

The scale of revenue varies widely in this group and so does the employee base. The below benchmarks total employees at IPO quarter. The median is almost 1,200.

Source: Company filings

LTM (last-twelve-months) Revenue per Full-time Employee ($ in 000's)

While the number of employees is helpful to assess scale, revenue per employee is a good proxy for efficiency. Of course, each company has a different product, market, delivery model, price, and end-customer, so this metric may not be perfectly comparable across the group but is still interesting to evaluate. The median is ~$200K.

Source: Company filings

Total Equity Capital Raised ($M)

5 of the 16 companies were either private equity-owned or bootstrapped therefore are not included in the below chart (Bentley, Datto, Jamf, Vertex, and ZoomInfo). The below represents total equity capital raised in the private markets. The median is $350M.

Source: Pitchbook and company filings

Valuation — Market Cap at IPO ($M)

The median market cap at IPO pricing was almost $3.9B.

Source: Company filings. Palantir and Asana were direct listings and market cap represents their respective reference prices at IPO.

IPO Size ($M)

Each company also raised significant dollars from the public markets. The median offering size was $502M and this includes both primary and secondary shares. With the SEC now allowing primary to be included in direct listings, 2021 could be a year where the majority of SaaS companies utilize a direct listing to IPO.

Source: Company filings. Asana and Palantir not included given direct listings.


Given IPOs are financing rounds, companies give up new shares to public market investors. The median dilution from IPO for this group of companies was 14.1%. Bentley Systems had an unusual IPO process; they only sold secondary shares owned by employees and sold <5% of the company.

Source: Company filings. Asana and Palantir not included given direct listings.

CEO Ownership Post-IPO

CEOs and employees at venture-backed companies usually take a significant amount of dilution as companies raise more equity capital to fund their growth. The median CEO ownership post IPO was 4.2% for this group of companies. Interestingly, only 7 out of 16 (or 44%) had a founder as CEO at IPO. Thomas M. Siebel, the CEO and founder of, was the CEO and founder of Siebel Systems, which was acquired by Oracle in 2006 for $5.8B. He has invested his own dollars into Asana’s CEO and co-founder, Dustin Moskovitz, who was also a Facebook co-founder, invested his own dollars into Asana. Both of those CEOs have significantly higher ownerships than others given their investments in their respective companies. Red columns below denote founder CEOs and not surprisingly, CEOs who are founders own more of their respective companies at IPO.

Source: Company filings

Post-IPO Stock Performance

Each company started trading in the back half of 2020, and while some are still in the lock-up period, it’s interesting to look at share price performance to date. Each company has seen massive appreciation in the public markets. The median return from IPO price for this group is 87%. Palantir, which went public through a direct listing, has seen the most appreciation from their reference price. Asana's return is also based on their reference price. A benefit of a direct listing is more efficient pricing, but Palantir has still increased dramatically since they started trading.

Source: Company filings and market data as 28-Dec-2020

EV / NTM (Next-twelve-months) Revenue Multiples

In most cases, SaaS companies are valued on a multiple of forward revenue. The below benchmarks enterprise value over NTM (next-twelve-months) revenue. The median is ~26x. You can see the multiples for the entire list of high-growth public SaaS companies here.

Source: Public Wall Street Research, company filings and S&P Capital IQ. Market data as of 28-Dec-2020.

Forward / NTM (next-twelve-months) Revenue Growth

Most of these businesses are growing revenue quickly and their valuation multiple is obviously correlated with growth. The below benchmarks NTM (next-twelve-month) growth rates — the median is 21%. Note that most high-growth SaaS companies tend to beat their revenue estimates in the first few quarters post their IPO, known as showing "beat and raises", so these consensus estimates are most likely conservative.

Source: Public Wall Street Research, company filings and S&P Capital IQ. Market data as of 28-Dec-2020.

What did it take to IPO as a SaaS company in 2020?‍

To make it public as a SaaS company in 2020, you were founded ~13 years ago, are at over $200M of implied ending ARR and growing ~40% YoY, have ~70%+ GAAP gross margins, are losing money, have a 115% dollar-based net expansion rate or net dollar retention rate, sell a product with an average ACV of ~$70K, have almost 1,200 FTEs, are based outside of Silicon Valley, raised ~$350M of equity capital from venture capitalists or are majority-owned by a private equity firm, sold ~$500M of stock to public investors for 14% of your company at a valuation of almost $4B, and as a CEO own ~4% post IPO. Since the IPO, your stock is up almost 90% and you’re trading at over a 25x NTM (next-twelve-months) revenue multiple.

Of the 16 SaaS IPOs that traded in 2020, they raised a cumulative $11B+ in the public markets (in 2019 that number was $5B across 12 companies). Even during a global pandemic and a closed IPO window for the first 6 months of the year, the number of SaaS IPOs increased by over 30% in 2020. Assuming the current market environment is similar in 2021 as it was in 2020, it could be another banner year for SaaS IPOs.

To receive these posts by email, click here.

Special thanks to Aimee He for her help on this post.


1. Palantir went public through a direct listing.

2. Asana went public through a direct listing.

*Meritech Capital is an investor in Snowflake and JFrog.

Read next