Software companies are reporting a pretty good third quarter – Tech Crunch

Written By Alex Willhelm

It’s great news for startups looking for capital heading into 2021

What a difference a week makes.

This time last week, in the wake of earnings from tech’s five largest American companies and early results from other software companies, it appeared that tech shares were in danger of losing their mojo.

But then, this week’s rally launched, and more earnings results came in. Generally speaking, the Q3 numbers from SaaS and cloud companies have been medium-good, or at least good enough to protect historically stretched valuations when comparing present-day revenue multiples to historical norms.

This is great news for yet-private startups that have had to deal with a recession, an uneven and at-times uncertain funding market, an election cycle and other unknowns this year. Wrapping 2020 with a market rally and strong earnings from public comps should give private software companies a halo heading into the new year, assisting them with both fundraising and valuation defense.

Of course, there’s still a lot more data to come in, markets are fickle and many SaaS companies will report next month, having a fiscal calendar offset by a month from how you and I track the year. But after spending time on the phone this week with JFrog’s CEO, BigCommerce’s CEO and Ping Identity’s CFO, I think things are turning out just fine.

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By sophiata@bu.edu
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