European SaaS: Resilience through tough markets

We guide SaaS founders, CEOs and investors on how to navigate market challenges while highlighting the performance indicators of companies most likely to emerge stronger.

We surveyed over 100 SaaS companies across Europe in partnership with HSBC Innovation Banking, from startups to late-stage scaleups. We analyse the trends and compare key metrics including growth, headcount productivity and revenue retention, which are critical to navigating the current environment.

The report also explores public market valuations, M&A and fundraising in European SaaS, including the quarterly evolution of deal activity along with a country-specific breakdown of what’s trending.

Alexis Scorer, Partner at GP Bullhound, commented: “The focus on capital efficient growth highlighted in last year’s report has been evidenced by this year’s survey, indicating broad improvements in operational efficiency across the European SaaS sector. Despite the continued decline in SaaS fundraising volumes, M&A activity has proved resilient and remains well above pre-pandemic levels for European SaaS.”

European SaaS survey – key takeaways

• Median ARR growth for SaaS companies with over €25m ARR declined from 44% in 2021 to 27% in 2022
• Significant increase in ARR per FTE to €124k; average grows by 30% vs last year’s report
• Slight improvement in Net Revenue Retention from 104% to 105% YoY
• Median gross margins fell from 80% in last year’s report to 75% this year
• Over a third of companies surveyed now profitable and c.40% of cohorts with ARR growth below 60% are profitable

European SaaS deal activity – key takeaways

• Despite the decline in fundraising volume since the Q2 2022 peak, total funds raised are above pre-Covid levels $4bn–$5bn per quarter
• SaaS M&A activity remains resilient with 178 transactions per quarter 2023 YTD, 30% above 3-year average

European SaaS public market – key takeaways

• Valuation gap between public US and European SaaS companies stabilised in 2023
• Revenue multiples for listed European SaaS companies recovering from c.4.3x at the start of the year to 4.8x in October
  

  Multiples for listed SaaS companies reboundin

Enquiries
For any enquiries, please contact:
Alexis Scorer, Partner, at alexis.scorer@gpbullhound.com

About GP Bullhound
GP Bullhound is a leading technology advisory and investment firm, providing transaction advice and capital to the world’s entrepreneurs and founders. Founded in 1999 in London and Menlo Park, the firm today has 14 offices spanning Europe, the US and Asia.