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Sergey @sergeycyw.bsky.social · 11h

P.S. To make the data on the chart easier to read, I removed $PLTR, which is trading at 122.8 EV/GP.

Sergey @sergeycyw.bsky.social · 11h

*-Selection criteria: software companies with the majority of their revenue subscription-based, EV over $1 billion, and a gross margin above 40%.

The chart includes the most popular stocks: $CRWD $PLTR $NET $RBRK $SHOP $ZS $SNOW $NOW $AXON $PANW $FIG $DUOL $MSFT $AMZN $GOOGL $APP $ORCL.

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Sergey @sergeycyw.bsky.social · 11h

In this case, I used the GAAP Operating Margin from the most recent quarter. It helps identify the latest trends and highlights companies that have recently achieved operating profitability. However, for companies affected by seasonality, the data may be distorted.

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Sergey @sergeycyw.bsky.social · 11h

On the chart, companies with a negative operating margin are marked in red, those with an operating margin below 5% in yellow, and those with an operating margin above 5% in green.

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Sergey @sergeycyw.bsky.social · 11h

I also include data on Operating Margin in the chart, as it impacts company valuation. Companies with a high positive operating margin should be valued higher than those with a negative operating margin.

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Sergey @sergeycyw.bsky.social · 11h

This multiple considers product efficiency—gross profit margin. Gross profit margin is a critical metric for software companies. Consistently high or improving margins are often viewed as indicators of a company's strong competitive position and market potential.

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Sergey @sergeycyw.bsky.social · 11h

#Stocks Let's examine SaaS companies* valuations by analyzing the EV/Gross Profit (GAAP) multiple relative to their projected revenue growth for the next year.

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Sergey @sergeycyw.bsky.social · 13h

P.S. To make the data on the chart easier to read, I removed $PLTR, which is trading at 99.2 EV/Sales.

Sergey @sergeycyw.bsky.social · 13h

*-Selection criteria: software companies with the majority of their revenue subscription-based, EV over $1 billion, and a gross margin above 70%.

The chart includes the most popular stocks: $CRWD $PLTR $NET $RBRK $ZS $SNOW $MDB $NOW $AXON $PANW $DUOL $APP $FIG $ADBE $CRM.

1

Sergey @sergeycyw.bsky.social · 13h

In this case, I used the GAAP Operating Margin from the most recent quarter. It helps identify the latest trends and highlights companies that have recently achieved operating profitability. However, for companies affected by seasonality, the data may be distorted.

1

Sergey @sergeycyw.bsky.social · 13h

On the chart, companies with a negative operating margin are marked in red, those with an operating margin below 5% in yellow, and those with an operating margin above 5% in green.

1

Sergey @sergeycyw.bsky.social · 13h

I also include data on Operating Margin in the chart, as it impacts company valuation. Companies with a high positive operating margin should be valued higher than those with a negative operating margin.

1

Sergey @sergeycyw.bsky.social · 13h

Additionally, understanding forward growth helps investors make informed decisions by comparing a company’s projections with its industry peers and market expectations, providing a clearer view of its growth trajectory.

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Sergey @sergeycyw.bsky.social · 13h

Evaluating growth stocks using forward projected revenue growth is crucial for investors because it provides insight into the company's future potential rather than just its current performance.

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Sergey @sergeycyw.bsky.social · 13h

#Stocks SaaS companies* are typically evaluated based on the EV/Sales multiple relative to their projected revenue growth for the next year.