SaaS (Software as a Service) is a software delivery model in which the customer accesses an application via internet on a subscription basis, without local installation. Its business model revolves around specific metrics: ARR (Annual Recurring Revenue), NRR (Net Revenue Retention), CAC (Customer Acquisition Cost), LTV (Lifetime Value) and churn rate. In SaaS startup valuation, preferred methods are ARR multiples (3x to 20x depending on growth and margins) and DCF on projected recurring cash flows. AI integration is rapidly transforming SaaS valuation parameters. See our dedicated publication.

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Example: a Swiss SaaS company presents CHF 4.2 million ARR (+35% annually), 118% NRR, CHF 12,000 CAC and CHF 86,000 LTV (LTV/CAC ratio 7.2x). European SaaS comparable peers support an 8x ARR multiple = CHF 33.6 million valuation. This multiple is justified by strong growth and net revenue expansion — above the 6x median for SaaS companies with NRR below 110%, reflecting the quality and stickiness of the recurring revenue base.

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Hectelion values SaaS companies with methods adapted to their growth and retention profile, integrating AI's impact on performance metrics and valuation multiples.