Calculate observed SaaS EV/ARR and EV/revenue multiples from enterprise value and comparable annual revenue bases, then review ARR yield and revenue-mix context.
Use enterprise value, ARR and annual revenue from a consistent valuation date and comparable annualized basis. ARR should exclude one-time revenue.
EV/ARR and EV/revenue are relative valuation ratios, not standalone judgments about whether a company is cheap or expensive. Compare companies only when enterprise-value definitions, revenue bases, periods, business models and market dates are reasonably comparable.
ARR is usually an annualized recurring run rate, while reported annual revenue may be trailing or recognized revenue. If those bases are not comparable, recurring-revenue share and implied nonrecurring revenue are only arithmetic differences, not accounting classifications. Use the dedicated SaaS Valuation Calculator when you want to estimate value from an assumed multiple.
This calculator answers a reverse-valuation question: given enterprise value and revenue, what multiple is implied? EV/ARR uses recurring revenue as the denominator, while EV/revenue uses the broader annual revenue base.
For the default scenario, $9.0 million of enterprise value divided by $1.5 million of ARR equals 6.00x EV/ARR. Dividing the same enterprise value by $1.8 million of total annual revenue equals 5.00x EV/revenue. ARR yield is the reciprocal of EV/ARR expressed as a percentage.
The recurring-revenue share and implied nonrecurring-revenue outputs are planning diagnostics only when ARR and total revenue are measured on comparable annualized bases. A point-in-time ARR run rate should not be subtracted mechanically from a historical trailing-revenue figure and interpreted as an accounting result.
Use the multiple alongside growth, net revenue retention, gross margin, profitability, customer concentration, company scale and the market date. A multiple can move because the business changed, because the market changed, or because the denominator definition changed.
This calculator is an educational comparison tool, not a valuation opinion or appraisal. For fundraising, M&A, board reporting or investment decisions, reconcile inputs to source systems and use current comparable-company or transaction evidence.
Read the matching guide for definitions, formula context, worked examples, reporting boundaries and common mistakes.
Disclaimer: This calculator provides estimates for planning and educational purposes only. Results depend on the assumptions and definitions entered and should not be treated as accounting, financial, legal, tax, valuation or investment advice. Validate material decisions with qualified professionals and your source systems.