Great observation.
Let me give you some information on broader SaaS valuations currently.
What we have seen from the beginning of this year is that the upper quartiles of SaaS valuations on a EV/Forward Revenue multiple basis have been contracting. They are merging with the middle quartiles.
What can we draw from this inference?
We need to look at the characteristics of an 'upper quartile' company compared to a 'middle quartile' company to understand the deeper root causes. Your upper quartiles are generally fast growing whilst burning multiples of revenue (prioritization of growth over cash flow considerations). Your middle quartiles are generally growing less rapidly, however are closer to sustainable cash flow operations.
Over this year we have seen that investors are refusing to pay substantially higher multiples for fast growth firms who burn cash. This is a primary cause for the contraction in valuations of the companies you mentioned.
Let me throw you a bone on this company.
I have never touched RFN as an investment option but I will tell you how I would look at this investment.
Let's assume the customer retention issue is temporary (questions of this company being a going concern are raised if they cannot fix this retention issue and the capital raising bloodline goes cold [particularly a concern these days with the ASX cracking its whip]).
I would calculate the EV/Forward Revenue multiple of this company and if it is higher than 4.7X-3.8X I would sell. If you are happy with the figure or have another way of valuing then hold. Either way, make sure you have an intrinsic value of what this company is worth! Don't just hold because other SaaS companies have contracted also!
You need to be in control of your own investment decisions. I am just giving you information on one of a myriad ways to value SaaS companies. I am not going to do the numbers for you but I can tell you things are not impressive. Good luck to management.
You can always lose more money. Good luck to you all! I really hope they can turn this around for you
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