European SaaS Report 2024

In collaboration with Paddle, we surveyed over 100 European SaaS companies, ranging from early-stage ventures to late-stage growth. The report evaluates key performance metrics including growth, revenue retention, and operational efficiency, which are critical to navigating the current market environment.

The report also explores public market valuations, M&A trends and fundraising activity in the European SaaS sector. It includes a detailed review of deal activity, highlighting quarterly trends and providing country-specific analysis.

Alexis Scorer, Partner at GP Bullhound, commented: “This year’s survey demonstrates encouraging progress across the European SaaS sector, with companies displaying continued improvements in gross margins, operational efficiency, and overall profitability. Nearly half of companies surveyed are now EBITDA positive, highlighting the continued emphasis on capital efficient growth. Despite subdued fundraising volumes, an increase in larger private placements and increasing M&A activity underscores the sector’s adaptability and resilience. With Public market SaaS valuations now above the three-year average and a renewed focus on profitable growth, the industry is well-positioned to benefit from an improving Macroeconomic environment in 2025.”

GP Bullhound European SaaS survey key takeaways

• Growth rates remain stable for late-stage SaaS. Despite a slight overall decrease in growth in 2023 across the cohort surveyed, growth rates for the €50m+ ARR companies are broadly in line with the previous year.
• Continued improvement in operational efficiency. ARR per FTE is approaching €150k for growth-stage companies and remains significantly above 2021 levels for €50m+ ARR companies, despite a slight reduction from last year.
• Stable year-on-year Net Revenue Retention of 110%. Median Net Revenue Retention was 110% – 112% in 2023 for companies surveyed, nearly identical to rates these companies exhibited in 2022.
• Broad improvements in Gross Margin year-on-year. All ARR cohort groups saw improvements in gross margin ranging from 1% – 7%, reversing the trend highlighted in last year’s survey.
• Nearly half of all SaaS companies surveyed are now profitable. Continued improvements in profitability, with 44% of all companies now EBITDA positive, compared with ~33% in last year’s report.

Public Market European SaaS

• SaaS valuations have increased above the 3-year mean. Average European SaaS valuations are trading at 6.7x, above the 3-year average of 5.4x.
• Growing emphasis on profitable growth. Correlation between public market valuations for the European SaaS index and Rule of 40 performance has increased significantly, with a renewed emphasis on growth versus last year.
• US vs EU SaaS valuation gap diverging again. Following a recent period of convergence between public US and European SaaS valuations, listed US SaaS companies are now valued at a 20%-40% premium over their European counterparts.

European SaaS Deal Activity

• Resilient M&A volume in 2024 YTD. Strong M&A activity in the YTD period signals early stages of recovery following several quarters of consecutive growth.
• Growing proportion of larger late-stage fundraisings. Whilst fundraising activity remains muted, deal value has begun to recover with a notable increase in the proportion of $250m+ transactions in 2024 YTD.

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

About GP Bullhound
GP Bullhound is a leading technology advisory and investment firm, providing transaction advice and capital to the world’s best entrepreneurs and founders. Founded in 1999 in London and Menlo Park, the firm today has 13 offices spanning Europe, US and Asia. For more information, please visit www.gpbullhound.com.