Market Pulse: SaaS Valuations Snapshot - September 2025
Software multiples are rising again. Public markets rewarded efficient growth through September, and private dealmakers followed suit, lifting valuation benchmarks across PLG, enterprise, and infrastructure SaaS. If you are planning a raise or a secondary, the data below will help you ground expectations before Q4 accelerates.
Key Signals This Month
- Median public SaaS EV/ARR climbed to 8.4x, up from 7.6x in August. PLG-focused names saw the sharpest re-rating (up 120 bps), while enterprise vendors posted a 50 bps gain.
- Rule-of-40 remains the dividing line. Companies with Rule-of-40 scores above 40 averaged 10.2x EV/ARR; those below 30 dipped to 5.9x.
- Private secondaries priced at a 10-15 percent discount to public comps. Late-stage PLG deals cleared at 7.4x forward ARR, enterprise at 6.6x, and infrastructure at 8.1x.
- IPO pipeline revived: five SaaS companies publicly filed in September, aiming for Q4 debuts. Expected valuation ranges sit 15-20 percent below 2021 highs but 25 percent above 2023 troughs.
- Secondary market liquidity improved. Carta's latest index noted a 31 percent increase in secondary transactions, with option refreshes and founder liquidity programs leading the uptick.
Valuation Dashboard
| Segment | Median EV/ARR (Aug) | Median EV/ARR (Sep) | QoQ ARR Growth | FCF Margin | Rule-of-40 | Notes |
|---|---|---|---|---|---|---|
| PLG / SMB | 8.5x | 9.7x | 38% | -3% | 35 | Boosted by standout quarters from Notion and Zapier; net retention stabilizing above 110%. |
| Enterprise | 7.2x | 7.7x | 31% | 8% | 39 | Long sales cycles easing; security and compliance spend driving upsells. |
| Infra & DevTools | 8.9x | 9.4x | 42% | 5% | 47 | AI tooling tailwinds; companies with usage-based pricing seeing higher stickiness. |
| Vertical SaaS | 6.6x | 7.1x | 33% | 6% | 39 | Healthcare and fintech leaders winning; proptech still lagging due to macro sensitivity. |
Private benchmarks: Top-tier PLG secondary sales cleared at 7.4x forward ARR, while insider-led extensions priced at 6.8x. Infrastructure secondary transactions commanded 8.1x, buoyed by AI-related demand. Vertical SaaS still trades at a 15-20 percent discount to peers due to real estate and healthcare reimbursement risk.
Segment Breakdown
PLG & SMB SaaS
PLG leaders delivered strong net revenue retention (110-115%) despite expansion fatigue earlier in the year. Notion's ARR crossed $350M with 40% YoY growth, while Slack reported 24% growth under Salesforce with improved profitability. Investors rewarded consumption-driven products with clear AI augmentation stories (e.g., Jasper, Zapier). However, cash burn remains a watch item: companies with negative 30% FCF margins are still capped around 6x multiples, underscoring the premium on efficiency.
Enterprise SaaS
Security, governance, and compliance vendors pulled enterprise multiples higher. Okta and CrowdStrike both delivered beat-and-raise quarters, pushing the subsector median to 8.2x EV/ARR. Renewal rates improved as procurement teams loosened budgets for core systems, but some verticals (HR tech, martech) continue to show consolidation pressure. Deals now include AI co-pilot add-ons that add 5-7% to ARR; investors are watching usage metrics to see if upsells stick.
Infrastructure & DevTools
Infrastructure multiples rode the AI wave. Datadog and Snowflake beat expectations, while GitLab and HashiCorp highlighted demand for enterprise DevOps automation. Usage-based pricing is driving higher net expansion (around 135% for leaders), and cross-sell motions with AI observability gained traction. Private markets saw high interest in managed vector databases and AI security platforms (AuroraOps, Vauban Secure AI); those rounds set valuations north of 12x forward ARR, though such premiums are reserved for top-tier teams.
Signals for Founders & CFOs
- Run updated valuation scenarios. With public comps rising, update your 2025 and 2026 raise cases. For PLG and infrastructure, top-quartile companies can now model 9-11x forward ARR; enterprise bands should stay in the 7-9x range depending on FCF.
- Revisit convertible and venture debt offers. Markets are more receptive to structured financings. Interest rates did not fall, but better valuation context allows for cleaner convert caps. Coordinate with finance leadership (see the upcoming capital strategy memo on venture debt versus convertibles slated for October).
- Check secondary appetite. With increased liquidity, employees and early investors can take modest off-the-table cash without torpedo-ing valuations. Structure programs with clear guidelines and board approvals.
- Tighten metrics reporting. Investors still expect transparent disclosures: net retention, CAC payback, burn multiples, and AI-driven feature adoption. Prepare dashboards that mirror public comparable metrics.
Investor Sentiment
- BVP Cloud Index climbed 6.8% in September; AI-leaning constituents drove most of the gains. Analysts noted margin expansion paired with durable top-line growth as the clear re-rating catalysts.
- Meritech Capital reported private SaaS medians at 7.0x forward ARR, with top decile reaching 9.5x. They flagged that deals above $300M ARR now require sequential growth above 8% per quarter to maintain valuation.
- Morgan Stanley SaaS Tracker signaled rising optimism among hedge funds for Q4 earnings; 58% of managers expect upside surprises, versus 35% three months ago.
- Buy-side conversations emphasize GAAP profitability and AI attach rates; funds are rotating into names with durable free cash flow even if growth dips below 30%.
Secondary Liquidity Check
- Carta's secondary marketplace recorded a 31% increase in transactions, with average discounts narrowing to 13% versus 20% in Q1.
- Top-tier companies allowed employees to sell up to 10% of vested holdings, a sign that boards are comfortable providing limited liquidity without triggering valuation cuts.
- Reminder: align secondary programs with investor rights and update 409A valuations after material transactions.
Sources & Further Reading
- BVP Cloud Index (September 2025 update)
- Meritech Capital SaaS Valuation Dataset (subscriber report)
- Morgan Stanley Research: SaaS & Cloud Compass (September 2025)
- Market Pulse: AI Funding Rebound in Q3 2025 (forthcoming companion article)