A rough market value.
A worked example
Starting figures
- Annual recurring revenue
- $1,200,000
- Revenue multiple
- 6
- Growth rate
- 60%
What it returns
- Valuation
- $7,200,000
- Implied per point of growth
- $120,000
- Next-year ARR
- $1,920,000
- Forward valuation
- $11,520,000
How to read the results
With the defaults above, valuation works out at $7,200,000.