Only AppFolio and Hashicorp have a market cap <$10b
If I look at the top 20 public software companies by revenue multiple, only 2 of them have a market cap <$10b. $AppFolio(APPF)$ and $HashiCorp, Inc.(HCP)$ . And Hashi is getting acquired.
The market is not willing to give sub-scale software companies premium multiples right now. It's not enough to be growing quickly - you need to prove durability. And right now the market isn't really willing to take that durability risk. Its saying "we'll believe it when we see it"
I think the reality is high revenue multiples only "make sense" if a company can either a) sustain growth, or b) sustain high FCF.
And there's been so many examples of subscale companies not being able to sustain growth that have seen rapid multiple compression. Just limited appetite for cash burning subscale software companies right now given the risk of "platforming" that they have
https://x.com/jaminball/status/1799205885782462813
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