Research · Scenario engine
SaaS valuation, decomposed
Every SaaS valuation rests on three components: the cash-flow base it generates (the numerator), the discount rate applied to it (the denominator), and the duration — how many years of high-growth cash flow the market still trusts before fade. Hold two fixed, move the third, and watch the price. Then move them together: the price moves on all three axes at once, and the combined isn't the sum of the parts — each shock lands on a base the others have already moved. That compounding is the second leg.
Dial each lever to an exact value and read the precise fair-value change.
The price moves on all three axes at once — the “multiplicative, not additive” point. The interaction term is the compounding residual: each shock lands on a base the others have already moved, so the combined is the product of the parts, not their sum (and for large simultaneous cuts the parts partly overlap).
Solid = the lever on its own (first-order Sobol); lighter = its interaction with the others (total − first). A big lighter share is the “multiplicative” effect, measured.
Each draw samples the three levers uniformly within their ± ranges and reprices the book; the histogram is the spread of outcomes, the shaded band is where 90% of outcomes land.
Key readings (representative SaaS book)
- −4.5% — a 25 bps rise in the 10-year, everything else held.
- −12.5% — a two-year cut to the trusted-growth window, rates and earnings held.
- −23.0% — +75 bps and a two-year duration cut together.
- −62.4% — the full "Leg 2: trust 2 years" scenario.