— Business & Valuation
Revenue Multiple Calculator
Value a company using EV/Revenue or EV/ARR multiples. Estimate enterprise value from revenue and a multiple, back out the implied multiple from price, or use peer ranges with recurring-revenue share and Rule of 40 context.
Enterprise value
$30,000
- Equity value
- $29,000
- EV — low (4.8×)
- $24,000
- EV — high (7.2×)
- $36,000
- EV / recurring revenue (ARR)
- 7.50
- Rule of 40
- 45%
Try: SaaS at 6×, Hypergrowth (12×), Peer range 4–9×, Implied multiple
— The valuation range
| Scenario | Multiple (×) | Enterprise value | Equity value |
|---|---|---|---|
| Low | 4.80 | $24,000 | $23,000 |
| Mid | 6.00 | $30,000 | $29,000 |
| High | 7.20 | $36,000 | $35,000 |
— Revenue quality and the multiple
| Component | Revenue | EV / this revenue |
|---|---|---|
| Total revenue | $5,000 | 6.00 |
| Recurring (ARR) | $4,000 | 7.50 |
| Non-recurring | $1,000 | 30.00 |
— The valuation, visualized
Download— How it works
Enterprise value = Revenue × EV/Revenue multiple. EV/Sales = Enterprise value ÷ Revenue. Equity value = Enterprise value − Net debt. Rule of 40 = Revenue growth % + Profit margin %.
Why value on revenue
Most valuation multiples need a profit figure, but a fast-growing company often has none — it’s deliberately running at break-even or a loss to capture a market. For these businesses the revenue multiple is the only comps method that works: enterprise value is simply revenue times the EV/Revenue multiple that similar companies trade at. It’s the standard way to value SaaS, marketplaces and early-stage tech, where the relevant top line is usually annual recurring revenue (ARR) rather than trailing GAAP revenue. The trade-off is that revenue says nothing about profitability, so the multiple has to carry all the judgement — which is why anchoring it to genuinely comparable companies, and to growth, matters enormously.
Worked example — 5,000 of revenue at a 6× EV/Revenue multiple, 1,000 net debt: Enterprise value = 5,000 × 6 = 30,000. Equity value = 30,000 − 1,000 = 29,000. Across a 4×–9× peer band, EV spans 20,000 to 45,000.
Revenue quality and EV/ARR
Not all revenue deserves the same multiple. Recurring subscription revenue is predictable and high-margin, so the market pays far more for it than for one-off or services revenue — which is why SaaS is valued on EV/ARR, not EV/total revenue. If 80% of a company’s revenue is recurring, applying the multiple to that recurring base gives an EV/ARR that’s higher than the headline EV/Revenue, and the gap is a direct read on revenue quality. The calculator splits the revenue and shows the multiple on each slice, so a business with a clean, mostly-recurring base is rewarded and one leaning on lumpy non-recurring revenue is flagged. When you compare two companies on EV/Revenue, check the recurring mix before concluding one is cheaper.
The Rule of 40 — earning the multiple
A revenue multiple is only justified if the growth (and eventual profitability) backs it up, and the SaaS shorthand for that is the Rule of 40: a company’s revenue growth rate plus its profit margin should exceed 40%. A business growing 50% while burning 10% of revenue scores 40 and earns a high multiple; one growing 15% at a 10% margin scores 25 and doesn’t. The calculator computes the Rule-of-40 figure and plots your multiple against the growth-multiple relationship, so you can see whether the multiple you’ve assumed is consistent with the company’s growth profile or is running ahead of it. Educational tool only — not investment advice; a revenue multiple ignores profitability and cost structure entirely, so pair it with a margin or DCF view before relying on it.
— Reader questions
When should I use a revenue multiple instead of EV/EBITDA?
Use a revenue multiple when EBITDA is negative or not meaningful — typically high-growth, SaaS or early-stage companies investing heavily ahead of profit. EV/EBITDA needs positive, representative earnings; when those don’t exist, EV/Revenue is the workable comps method. For profitable, mature businesses, EV/EBITDA is usually preferred because it reflects profitability that the revenue multiple ignores.
What is a good EV/Revenue multiple?
It varies enormously by growth and business model — there’s no universal figure. High-growth SaaS (40%+ growth) can command 10–15× or more, moderate-growth software 4–8×, and lower-growth or lower-margin models (e-commerce, marketplaces) often 1–4×. The multiple should track growth and recurring-revenue quality, so it only means something against a comparable peer set.
What is EV/ARR and why is it higher than EV/Revenue?
EV/ARR applies the enterprise value to annual recurring revenue rather than total revenue. Because recurring revenue is a subset of (and usually less than) total revenue, EV/ARR comes out higher than EV/total-revenue. It’s the SaaS standard because recurring revenue is predictable and high-quality, so investors value it more richly than one-off or services revenue.
What is the Rule of 40?
A SaaS benchmark: a company’s revenue growth rate plus its profit (or FCF) margin should add up to at least 40%. It captures the growth-versus-profitability trade-off — a company can grow fast and lose money, or grow slowly and be profitable, but the sum should clear 40 to justify a premium revenue multiple. Below 40 suggests the multiple may be running ahead of the fundamentals.
How do I get equity value from a revenue multiple?
Multiply revenue by the EV/Revenue multiple to get enterprise value, then subtract net debt (total debt minus cash) to reach equity value. Divide by the diluted share count for the per-share value. The revenue multiple gives enterprise value directly, so the net-debt bridge is the same final step as with any EV-based method.