Alex Kurland

Cathy Choi

Owner New Image

Owner - Arming Local Businesses to Take on Their Goliaths

Meritech Team

pulse

Meritech Software Pulse | 25-Feb-2025

Welcoming Arsham to Meritech

Clay Blog Image

Doubling down on Clay’s vision for the future of GTM 

Alex Clayton

Anthony DeCamillo

Austin Wang

Source: Company filings and CIQ as of 15-Nov-2024. Note: Implied ARR defined as quarterly total revenue multiplied by four. Free cash flow defined as cash flow from operations minus capital expenditures and capitalized software costs. Rule of 40 defined as  LTM revenue growth + LTM free cash flow margin. LTM (last-twelve-months) defined as the last four reported quarters. LTM payback period shown in months. Payback period calculated as prior LTM non-GAAP sales and marketing expense divided by LTM new implied ARR multiplied by LTM non-GAAP gross margin multiplied by 12. LTM magic number calculated as LTM net new implied ARR divided by LTM non-GAAP sales and marketing expense. All financial figures are non-GAAP which adjust for items such as stock-based compensation, amortization of intangibles, and other one time and/or extraordinary expenses

2 EV + ARR Percentiles

3 product screenshot

4 Network Effects

Source: S-1. Note: Assumes Ara Mahdessian and Vahe Kuzoyan have the same beneficially owned shares as disclosed in the S-1. This assumes they both exercise their options to each purchase ~1M shares of Class B common stock. Ownership percentages based on total Class A and Class B basic shares outstanding plus both the co-founders’ ~1M options to purchase Class B common stock.

5 Ownership

Source: S-1. Note: Round-dates and post-money valuations per Pitchbook or calculated using ServiceTitan’s S-1. Blended price calculated as the weighted average share price of the ~400K Series H-1 shares issued at $84.5712 per share and the ~1.9M tender offer shares issued at $70 per share. Post-money valuation for the Series H-1 / Tender round calculated as blended price times current fully diluted shares outstanding. 

6 Share Price Over Time

Source: S-1. Note: Blended price calculated as the weighted average share price of the ~400K Series H-1 shares issued at $84.5712 per share and the ~1.9M tender offer shares issued at $70 per share.

7 Current Shareholder Value

Source: Company filings and CIQ as of 15-Nov-2024. Note: Implied ARR defined as quarterly total revenue multiplied by four 

8 ARR Benchmarking

Source: S-1. Note: Implied ARR defined as quarterly total revenue multiplied by four

9 Annual P&L

Source: S-1. Note: Implied ARR defined as quarterly total revenue multiplied by four
(1) Based on ServiceTitan’s disclosure that 95% and 96% of annualized billings in FY 2023 and FY 2024, respectively, are from active customers
(2) ServiceTitan disclosed >$100K annualized billing customers represented over 50% of billings. Based on this, we assume >$100K customers account for 50% of ARR


10 Annual Metrics

11 ARR Over Time

Source: S-1. Note: Implied ARR defined as quarterly revenue multiplied by four

12 Subscription and Usage ARR

13 Quarterly Revenue

14 Revenue Contribution

Source: S-1. Note: Implied usage revenue take rate calculated as platform usage revenue divided by gross transaction volume. Implied total revenue take rate calculated as total revenue divided by gross transaction volume. 

15 GTV and Take Rate

16 Gross and Opex Margins

17 Gross Margin by Segment

18 Non-GAAP and GAAP Operating Income

Source: S-1. LTM (last-twelve-months) defined as the last four reported quarters. LTM payback period shown in months. Payback period calculated as prior LTM non-GAAP sales and marketing expense divided by LTM new implied ARR multiplied by LTM non-GAAP gross margin. LTM magic number calculated as LTM net new implied ARR divided by LTM non-GAAP sales and marketing expense.

19 Magic Number and Payback Period

Source: S-1. Note: Non-GAAP EBIT Rule of 40 defined as YoY revenue growth + quarterly non-GAAP operating income margin 

20 EBIT Rule of 40

21 Free Cash Flow

22 Quarterly P&L

Source: S-1. Note: Implied transaction take rate calculated as platform usage revenue divided by gross transaction volume.

23 Selected KPIs

24 Valuation

Source: S-1, company filings, and CIQ as of 15-Nov-2024

25 Scatterplot

Source: S-1, company filings and CIQ as of 15-Nov-2024. Note: Enterprise value ranges are illustrative

26 Valuation Sensitivity

Source: Company filings and CIQ as of 15-Nov-2024. Note: Implied ARR defined as quarterly total revenue multiplied by four. Free cash flow defined as cash flow from operations minus capital expenditures and capitalized software costs. Rule of 40 defined as LTM Revenue Growth + LTM free cash flow margin. LTM (last-twelve-months) defined as the last four reported quarters. LTM payback period shown in months. Payback period calculated as prior LTM non-GAAP sales and marketing expense divided by LTM new implied ARR multiplied by LTM non-GAAP gross margin multiplied by 12. LTM magic number calculated as LTM net new implied ARR divided by LTM non-GAAP sales and marketing expense. All financial figures are non-GAAP which adjust for items such as stock-based compensation, amortization of intangibles, and other one time and/or extraordinary expenses

27 Comps

ServiceTitan S-1 Breakdown

2024 Meritech Annual Meeting Market Insights

1 Adobe

2 S-1 Evolution

Source: CIQ as of 16-Sep-2024 and company filings. See footnote on final paragraph for calculation detail of annual metrics.

3 Market Cap and Multiples

Source: CIQ as of 16-Sep-2024 and company filings. Daily growth-adjusted revenue multiple calculated as enterprise value divided by NTM revenue divided by NTM revenue growth rate. See footnote on final paragraph for calculation detail of annual metrics. 10-year Treasury Yield is a median of all days.

4 Growth adjusted

Source: CIQ as of 16-Sep-2024 and company filings. ARR represents annualized revenue run-rate and calculated as current quarter total revenue multiplied by four. NTM Rule of 40 calculated as NTM (last-twelve-months) revenue growth plus NTM (last-twelve-months) free cash flow margin. See footnote on final paragraph for calculation detail of annual metrics.

5 ARR and Rule of 40

Source: CIQ as of 16-Sep-2024 and company filings. All financial figures are non-GAAP, if applicable. See footnote on final paragraph for calculation detail of annual metrics. 

6 OpEx and ARR FTE

Source: CIQ as of 16-Sep-2024 and company filings. Companies are sorted by EV/NTM revenue multiple. See footnote on final paragraph for calculation detail of annual metrics.

7 Tickers

8 Finishes

SaaS Isn’t Dead (Yet) and AI Could Make it Bigger

Dan Knight

1 product image

25 Cap Table Pie Chart

26 Dollars Output

Source: Company filings and CIQ as of 05-Jul-2024. Note: Implied ARR defined as quarterly total revenue multiplied by four. Free cash flow defined as cash flow from operations minus capital expenditures and capitalized software costs. Rule of 40 defined as Implied ARR Growth + LTM free cash flow margin. Payback period shown in months. Payback period calculated as prior quarter non-GAAP sales and marketing expense divided by current quarter net new implied ARR multiplied by current quarter non-GAAP gross margin multiplied by 12. LTM (last-twelve-months) defined as the last four reported quarters. ACV defined as quarterly implied ARR divided by quarterly customer count. All financial figures are non-GAAP which adjust for items such as stock-based compensation, amortization of intangibles, and other one time and/or extraordinary expenses


2 financial comparison

Source: S-1. Metrics shown in the table above are GAAP unless otherwise noted. Non-GAAP metrics are calculated as GAAP less SBC

3 annual P&L

4 annual selected key metrics

5 quarterly net new ARR

6 revenue contribution by revenue line

7 SaaS contracts vs perpetual annual

Source: S-1. All metrics are Non-GAAP. Non-GAAP metrics are calculated as GAAP less SBC

8 gross margin and opex of revenue by quarter

9 non-GAAP operating and fcf margins

Source: S-1. Rule of 40 defined as % LTM FCF Margin + % YoY Growth of Reported ARR

10 rule of 40, ARR growth and LTM fcf margin

11 total customers and segmentation

12 customer growth rates by segment

13 implied ACVs

14 implied ACV percent tiers

Source: S-1. Payback period shown in months. Payback period calculated as prior quarter non-GAAP sales and marketing expense divided by current quarter net new implied ARR multiplied by current quarter non-GAAP gross margin multiplied by 12. Non-GAAP calculated as GAAP less SBC

15 sales efficiency

16 free cash flow and margin

Source: S-1. Note: % cRPOs represents the percentage of remaining performance obligations that are expected to be recognized as revenue in the next 12 months

17 RPOs and cRPOs

Source: S-1. OneStream defines billings as a non-GAAP measure that is calculated by taking the change in deferred revenue less the change in unbilled accounts receivable between the start and end of the period and adding that to total revenue recognized in the same period

18 billings and growth

19 us and international

20 non-GAAP quarterly P&L

Source: S-1. Metrics shown in the table above are GAAP unless otherwise noted. Non-GAAP metrics are calculated as GAAP less SBC.

21 quarterly KPIs

22 rule of 40 table

Source: S-1, company filings, and CIQ as of 05-Jul-2024 

23 correlation chart

Note: Enterprise value ranges are illustrative 

24 valuation sensitivity

OneStream | S-1 Breakdown

Tanner Bhonslay

Securing the 99%, Welcome Huntress

Source: CIQ as of 12-Apr-2024 and company filings. Note: Implied ARR defined as quarterly total revenue multiplied by four. Rule of 40 defined as NTM Revenue Growth + NTM free cash flow margin. NTM defined as next-twelve months consensus estimate.

1 Table Chart

Source: CIQ as of 12-Apr-2024 and company filings. Note: Implied ARR defined as quarterly total revenue multiplied by four. 

2 Regression

Source: CIQ as of 12-Apr-2024 and company filings. Note: Chart is sorted by implied ARR at IPO quarter. Implied ARR defined as quarterly total revenue multiplied by four. IPO trading metrics represent forward 20-day average from the first time forward estimates were available. Rule of 40 defined as LTM Implied ARR Growth + LTM free cash flow margin. Multiple of money from IPO price. 
* Indicates current or former Meritech investment. 

logos

Source: CIQ as of 12-Apr-2024 and company filings. Note: Implied ARR defined as quarterly total revenue multiplied by four. IPO trading metrics represent forward 20-day average from the first time forward estimates were available. Rule of 40 defined as LTM Implied ARR Growth + LTM free cash flow margin. 

IPOs and Today

2024: When to IPO in the Age of Uncertainty

2 Timeline

3 Product Platform

4 How customers use it

5 Customers

6 Editions

7 ownership pie chart

8 value at fair price bar chart

9 CEO award

10 share prices over time and MoM

11 ARR benchmarking

12 Annual P&L

13 ARR and net ARR

14 Contribution Margin

15 Total Quarterly Revenue

16 Quarterly Revenue Percents

17 Sub ARR and Total Revenue

18 GM and Opex Margins

19 Operating Margin

Source: S-1. Note: Average subscription dollar-based net retention rate is calculated by first identifying subscription customers, or the prior period subscription customers, which were subscription customers at the end of a particular quarter, or the prior period. Subscription ARR is then calculated from these prior period subscription customers at the end of the same quarter of the subsequent year, or the current period 

20 NDR

21 Large Customers and Growth

Source: S-1. Note: Metrics are GAAP as non-GAAP is not available in quarterlies

22 Sales efficiency

23 FCF and Margin

24 FCF Statement

25 US and International revenue

26 Quarterly P&L

27 Valuation Table on Regression

Source: CIQ as of 29-Mar-2024 and company filings

28 Regression

Note: Enterprise value ranges are illustrative

29 Ranges

Rubrik IPO | S-1 Breakdown

Source: CIQ as of 01-Mar-2024. Note: 60 or more trading days required to be included in a calendar year. Growth adjusted multiple calculated by dividing enterprise value over NTM revenue over NTM revenue growth rate. Implied ARR defined as quarterly total revenue multiplied by four.

Top 5 Companies by Growth Adjusted Multiple by Year

Source: CIQ as of 01-Mar-2024. Note: NTM defined as next-twelve months consensus estimate.


Source: Company Filings and CIQ as of 01-Mar-2024. Note: Implied ARR defined as quarterly total revenue multiplied by four.


Source: CIQ as of 01-Mar-2024. Note: Growth adjusted multiple calculated by dividing enterprise value over NTM revenue over NTM revenue growth rate.


Source: CIQ as of 01-Mar-2024 and Company Filings. Note: NTM defined as next-twelve months consensus estimate. Free cash flow defined as cash flow from operations minus capital expenditures and capitalized software costs. Data represents the 30-day rolling average.

7 10

Source: Company Filings and CIQ as of 01-Mar-2024. Note: NTM defined as next-twelve months consensus estimate. Free cash flow defined as NTM cash flow from operations minus NTM capital expenditures and capitalized software costs.

Source: Company Filings and CIQ as of 01-Mar-2024. Note: NTM defined as next-twelve months consensus estimate. Rule of 40 defined as NTM revenue growth + NTM free cash flow margin.


10 1

11 1

Source: Company Filings and CIQ as of 01-Mar-2024. Note: NTM defined as next-twelve months consensus estimate. Implied ARR defined as quarterly total revenue multiplied by four. Free cash flow defined as cash flow from operations minus capital expenditures and capitalized software costs. Rule of 40 defined as NTM revenue growth + NTM free cash flow margin.

12 1

Source: Company Filings. Note: We define relative importance as the ratio of the correlation of NTM revenue growth and NTM FCF Margin to EV / Implied ARR Multiple based on a two-factor linear regression analysis. Represents two-quarter rolling average. Data excludes Zoom.

13 1

Source: Company Filings and CIQ as of 01-Mar-2024. Note: NTM defined as next-twelve months consensus estimate. Implied ARR defined as quarterly total revenue multiplied by three. Meritech Rule of 40 defined as NTM revenue growth multiplied by three + NTM free cash flow margin. Excludes companies with top decile residuals from the line of best fit.

14 1

Source: Company Filings and CIQ as of 01-Mar-2024. Note: NTM defined as next-twelve months consensus estimate. Implied ARR defined as quarterly total revenue multiplied by four. NTM Rule of 40 defined as NTM revenue growth + NTM free cash flow margin. Meritech Rule of 40 defined as NTM revenue growth multiplied by three + NTM free cash flow margin. Meritech Rule of 40 calculation excludes companies with top decile residuals from the line of best fit. Data represents 90 day rolling average.


15 1

16 1

17 2

18 2

19 1

Source: Company Filings and CIQ as of 01-Mar-2024. Note: Implied ARR defined as quarterly total revenue multiplied by four. Annualized Gross Profit defined as quarterly gross profit multiplied by four. Free cash flow defined as cash flow from operations minus capital expenditures and capitalized software costs. LTM Rule of 40 defined as Implied ARR Growth + LTM free cash flow margin. Payback period shown in months. Payback period calculated as prior quarter LTM non-GAAP sales and marketing expense divided by current quarter LTM net new implied ARR multiplied by current quarter LTM non-GAAP gross margin multiplied by 12. LTM (last-twelve-months) defined as the last four reported quarters. ACV defined as quarterly implied ARR divided by quarterly customer count. All financial figures are non-GAAP which adjust for items such as stock-based compensation, amortization of intangibles, and other one time and/or extraordinary expenses. Historical data includes over 100 public SaaS companies as defined by Meritech.

20 1

Source: Company Filings. Note: Quarters are only shown after all companies report earnings.


21 1

Source: Company Filings. Note: Implied ARR defined as quarterly total revenue multiplied by four. Quarters are only shown after all companies report earnings.


22 2

Source: Company Filings. Note: Payback period shown in months. Payback period calculated as prior quarter LTM non-GAAP sales and marketing expense divided by current quarter LTM net new implied ARR multiplied by current quarter LTM non-GAAP gross margin multiplied by 12. LTM (last-twelve-months) defined as the last four reported quarters. All financial figures are non-GAAP which adjust for items such as stock-based compensation, amortization of intangibles, and other one time and/or extraordinary expenses. Quarters are only shown after all companies report earnings.


23 3

24 4

Source: Company Filings. Quarters are only shown after all companies report earnings.


25 5

Meritech Software Pulse | 07-Mar-2024

Source: CIQ as of 01-Sep-2023. Note: NTM defined as next-twelve months consensus estimate.

2-Enterprise-Value-:-NTM-Revenue-Multiples---Top-10

Source: Company Filings and CIQ as of 01-Sep-2023. Note: Implied ARR defined as quarterly total revenue multiplied by four.

3-Enterprise-Value-:-Implied-ARR---All-SaaS

Source: CIQ as of 01-Sep-2023 and Company Filings. Note: NTM defined as next-twelve months consensus estimate. Free cash flow defined as cash flow from operations minus capital expenditures and capitalized software costs. Data represents the 30-day rolling average.

4-Median-NTM-Revenue-Growth-and-Free-Cash-Flow-Margins---All-SaaS

Source: Company Filings. Note: Quarters are only shown after all companies report earnings.

5-Median-Net-Dollar-Retention---All-SaaS

Source: Company Filings. Note: Implied ARR defined as quarterly total revenue multiplied by four. Quarters are only shown after all companies report earnings.

6-Median-Implied-ARR-per-FTE---All-SaaS

Source: Company Filings. Note: Payback period shown in months. Payback period calculated as prior quarter LTM non-GAAP sales and marketing expense divided by current quarter LTM net new implied ARR multiplied by current quarter LTM non-GAAP gross margin multiplied by 12. LTM (last-twelve-months) defined as the last four reported quarters. All financial figures are non-GAAP which adjust for items such as stock-based compensation, amortization of intangibles, and other one time and/or extraordinary expenses. Quarters are only shown after all companies report earnings.

7-Median-Payback-Periods---All-SaaS

Source: Company Filings and CIQ as of 01-Sep-2023. Note: NTM defined as next-twelve months consensus estimate. Free cash flow defined as NTM cash flow from operations minus NTM capital expenditures and capitalized software costs.