Q4 Consumer Tech Multiples

Below are revenue multiples for publicly traded consumer tech companies (B2C).?Industries and therefore multiples vary widely.?If you’re looking for data on SaaS multiples, that blog came out a week ago.?

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Social media trades at 6.1x.?Multiples rose steadily through 2020 peaking at 22.7x on median in Q1 2021.?YOY growth in the space is 14% on median, with Snap and Doximity leading the way.?Facebook is still the monster in the space with $118bln of annual revenue and a phenomenal EBITDA margin of 37%, but growth is down to 5%.?The newcomer, Doximity, is trading at 13.4x, the 5th quarter of decline from the peak of 50.8x.???

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Travel marketplaces down to 2.3x.?Multiples hit 10.6x in Q2 2021 which is remarkable for a business that traditionally trades no greater than ~3x.?Booking.com is trading at 5.5x.?

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Traditional marketplace multiples vary widely.?Prior to Q3 2018, the sector only had 2 companies and now has 11.??The median multiple is now 2.6x, but Etsy, Fiverr, Upwork and AirBnB have stronger multiples.?eBay has the best margin at 30%, while Airbnb combines nice growth (51%) and a profit margin of 21%.?

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Labor intensive space.?The only reason we even include these companies in our analysis is because investors like Softbank insist on labelling these services businesses as tech co’s.?At best, they’re tech enabled which isn’t the same thing at all.?Remember when Groupon was a high flier? Well today it’s shrinking (-38% YOY growth) and trades at 0.5x revenue.?Cash on the books represents nearly the entire the market cap.?This was one of the fastest growing companies ever that came up during the recession of ‘08, and now no one cares.?Redfin and Opendoor have been decimated over time.?Redfin and Compass don’t make money, which is a very dangerous place to be for services businesses of their size.?

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Other Outliers.?DraftKings trades at 3.4x, way down from it’s 47x days.?DoorDash trades at 2.8x, down from 22.3x.?Robinhood trades at 0.4x, whereas it opened at 20x.???

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Rideshare multiples crushed.?Lyft is stuck at 1.1x revenue while Uber is at 2.6x revenue.?We suspect the revenue multiple for both would be higher, but both businesses light cash on fire.?Lyft’s EBITDA margin is -23% and Uber’s is -6%.?It’s hard to envision either company generating cash any time in the near future given their current market share and very high levels of burn, and keep in mind food delivery saved Uber during 2020.?Bird is trading at 0.8x as their business model is broken and they seem headed to insolvency.

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Subscription. ?B2C subscription is an excellent business model but now trades at 3.7x revenue.?Match may be the best business model, with 30% margins and 13% YOYG. ?Duolingo which is newest to the group trades at 7.7x.?

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Gaming.?The median revenue multiple of 4.8x is strong. SciPlay is a mess while Roblox cratered to 8.3x from a high of 42x. ?In 2021 Roblox got hit with a $200mm lawsuit over music rights (June 2021).

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Ecommerce is varied. The sector is the least attractive to investors, with a median revenue multiple of 0.6x.?There is a big difference between what we would call premium ecommerce like Carvana, Allbirds, Coursera, Chewy, Warby, LegalZoom, and Amazon, versus weak ecommerce like Blue Apron (0.2x revenue).?Note that the margins in ecommerce are terrible with a median EBITDA margin of -6% and YOY growth of only 10%.?Amazon is at 10%, the majority of their profit comes from AWS.?

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Hardware is down to 1.8x.?Roku has fallen the most. ?Apple’s growth is 8%, very strong for a company with $394bln in annual sales and a 33% margin.?

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Visit us at blossomstreetventures.com and email me directly at [email protected].?All founders and funds welcome!?We invest in companies with run rate revenue of $3mm to $30mm, with year over year growth of 20% to 50%+ depending on revenue.?We lead or follow in growth rounds and special situations like inside rounds, small rounds, rushed rounds, corralling investors with our term sheet, bridges, inbetweeners, cap table clean up, and extensions.?We can commit in 3 weeks and our check is $1mm to $4mm.?Also visit https://blossomstreetventures.com/metrics/ for always up-to-date SaaS metrics.