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- Interest rates and the effect on SaaS valuation 💰
Interest rates and the effect on SaaS valuation 💰
And also: Layoffs at Oracle and Salesforce 🌨, Microsoft Cloud creates job boom in the UAE 💪, Nutanix exploring a sale to PE 🏷
This is the Cloudly Update. Helping you stay above the Clouds.
Today we bring you:
- SaaS valuation and interest rates
- Layoffs at Oracle and Salesforce
- UAE job boom from Microsoft Cloud
- Fulcrum raising A round
- Nutanix Exploring Sale
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Enterprise-value-to-forward-revenue multiples are now below 2016 levels for the first time in 6 years.
The 25th percentile trade at 3.3x today compared to 4.0x in 2016
The 50th percentile trade at 4.9x vs 5.6x
The 75th percentile retained a premium of 7.3x vs 5.8x
The rates on the 10-year bond correlate at -0.49 R^2, meaning yield changes explain about half of the forward multiple’s movements since 2019
How low could forward multiples fall with Fed’s raising rates?
Assuming that the correlation between the interest rates continues and using that as a model, a 5% interest would mean median revenue multiples below 3x.
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Oracle laid off 201 workers permanently from its Redwood Shores campus in San Francisco.
The layoffs were kicked off in August by cutting jobs in marketing and its U.S. customer experience (CX) division.
Salesforce also announced layoffs, largely contract workers, and implemented a hiring freeze through January. Previously laid off in August 2020.
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Microsoft to add more than $39 billion and about 100,000 jobs to the UAE economy in the next four years. More than two-thirds of the jobs directly deal with technology, rest will be at the end-user level, highlighting the need to boost the skills of users.
More
Will spend about $3.4bn to support local businesses in data center regions
Continuing discussions with local authorities on potential partnerships in highly regulated sectors
Partners with Abu Dhabi Digital Authority, the Ministry of Education, First Abu Dhabi Bank, Mashreq Bank, DP World, Dubai International Airport, and Majid Al Futtaim Retail.
The rise of technology-focused young consumers and an evolving digital landscape drive growth in the region.
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Fulcrum, a Manufacturing software start-up, raised $18.8 million in Series A financing led by Bessemer Venture Partners.
Other participants included Matchstick Ventures, Bread & Butter Ventures, Motivate Venture Capital, Battery Ventures, Social Starts, and Schematic Ventures.
Funds to be utilized for moving into a new office space downtown, developing products, hiring engineers, designers, and customer support and sales.
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Hybrid cloud software maker Nutanix is exploring a sale and is expected to target private equity firms and fellow market players in the tech industry.
Shares jumped 23%, expecting a significant premium on acquisition. Potential sale value to be higher than its Thursday market capitalization of about $5 billion.
Financial Brief
Revenue of $385.5 million in quarter ended July 31, higher than expectations
Revenue guidance for the current quarter and 2023 fiscal year surpassed expectations
Annual contract value bookings grew 10% last quarter
Annual recurring revenue increased 37% Y-O-Y
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