Specialist valuations for Australian SaaS and software companies.

A SaaS company valuation determines what an Australian software business is worth for a capital raise, founder exit, employee share scheme, restructure or tax event. Prismi prepares evidence-led valuations that justify whether a revenue multiple or an earnings multiple applies, reconcile ARR to recognised revenue under AASB 15, and analyse retention, CAC payback and Rule of 40 positioning — concluding at the most supportable position within a supportable range.

When a SaaS or software company needs a valuation

SaaS valuations are triggered by capital raises and the option pricing that follows them, founder and early-shareholder exits, sales to strategic or private equity acquirers, restructures out of founder trusts into investable company structures under Subdiv 328-G, small business CGT concession claims under Div 152 on exit, shareholder disputes and buy-sell events. The common thread is that someone — an investor, a departing shareholder's lawyer, the ATO applying its market valuation guidance — will test the number, so the file has to be built to be tested. Employee share scheme valuations under Div 83A for startup option pricing are a distinct Prismi engagement with their own methodology and documentation; where a company needs both an enterprise valuation and an ESS valuation, the two are scoped together but reported separately.

Earnings business or revenue business — the report has to justify which

The single largest source of unsupportable SaaS valuations is regime confusion. Revenue multiples exist because a high-growth company reinvesting every dollar into acquisition can be genuinely valuable while reporting minimal profit — current earnings understate the value of the recurring base being built. That logic only holds while growth and retention justify it. A profitable, slow-growth SaaS business — mature product, modest net revenue retention, healthy margins — is an earnings business, and capitalisation of maintainable earnings is the defensible primary method. Applying a venture-style revenue multiple to it produces a number that will not survive a sceptical reader. The report states which regime applies and why, by reference to growth rate, retention, gross margin and reinvestment, and cross-checks one regime against the other so the conclusion is anchored — consistent with the market value basis in IVS 104 and the willing-but-not-anxious principle from Spencer v Commonwealth (1907). Where a founder needs the report to land on a pre-agreed raise valuation, we will say so and decline the engagement on those terms.

ARR, retention and the metrics behind the multiple

ARR is a contract run-rate metric, not an accounting figure. Under AASB 15, revenue is recognised as performance obligations are satisfied — annual contracts billed upfront sit in deferred revenue until earned, implementation and onboarding fees may be recognised over the contract term, and usage-based components behave differently from committed subscription. The valuation file reconciles headline ARR to recognised revenue and the contract liability balance, and tests whether once-off services revenue has been dressed as recurring. From there, the retention evidence carries the multiple: net revenue retention above 100% supports a premium position, but NRR can mask gross churn where expansion in surviving accounts covers logo losses, so gross churn by customer cohort — sourced from the billing system, not a summary dashboard — sits alongside it. CAC payback measures whether growth is being bought efficiently, and Rule of 40 positioning (growth rate plus profit margin) frames where the business sits within the supportable range.

Development costs, the R&D Tax Incentive and normalised earnings

Two otherwise identical software businesses can report materially different EBITDA depending on how much development cost is capitalised under AASB 138 rather than expensed. The valuation normalises for this: development spend is treated consistently — commonly by measuring earnings after the ongoing development cost required to keep the product competitive, whether expensed or capitalised — and amortisation of previously capitalised development is examined for the same reason. R&D Tax Incentive receipts require an explicit position rather than a default. A refundable offset received annually can look like recurring income, but a purchaser will not price it as maintainable earnings without evidence the eligible activity continues at a similar scale. The report documents the treatment adopted and the reasoning. Prismi is not a registered tax agent — R&DTI eligibility and claims are matters for the company's accountant or R&D adviser; the valuation records the earnings treatment, not the entitlement.

IP assignment hygiene — the value gate acquirers will test

For a software business the primary asset is the codebase, and absent a written assignment, code written by contractors is generally owned by the contractor, not the company. Chain-of-title gaps — contractor-written modules without assignment deeds, founder-owned trade marks and domains, pre-incorporation code never formally transferred, open-source components with licence obligations incompatible with commercial distribution — are found in acquirer due diligence with near certainty. They are found by the valuation first, or they are found as a price reduction later. The report records the state of IP assignments as a value gate: where material components are unassigned, the supportable position reflects that the asset being valued is not yet cleanly transferable. Resolving assignments is legal work for the company's lawyer; the valuation identifies the exposure and its effect on the range.

What the valuation file needs

SaaS valuations are evidence-heavy because the metrics that carry the multiple must be sourced, not asserted. A typical file includes:

• ·Monthly recurring revenue movement for 24–36 months, split into new, expansion, contraction and churn — exported from the billing system
• ·Financial statements and management accounts for the past three years, with the AASB 15 revenue recognition policy and deferred revenue schedule
• ·Customer concentration analysis and contract terms for the largest accounts
• ·Development cost capitalisation policy, capitalised amounts and the amortisation schedule
• ·R&D Tax Incentive claim history and current-year position
• ·Employment and contractor agreements evidencing IP assignment, plus the trade mark and domain register
• ·Cap table, shareholders agreement, and ESS plan rules and option ledger where options are on issue

Which Prismi tier fits

Most trading SaaS businesses sit at Comprehensive (from $3,995 + GST, 15–25 business days), which carries the cohort, retention and normalisation analysis this page describes. The Defensible Valuation File (from $8,995 + GST, 25–35 business days) is the appropriate tier where the valuation will be tested — a raise with sophisticated investors, a shareholder dispute, or a tax position such as a Div 152 claim or a Subdiv 328-G restructure — prepared with ATO market valuation expectations in mind and documented so the position is defensible if reviewed. Essential (from $1,495 + GST, 10–14 business days) suits small or early-stage engagements where a credible point-in-time value is needed for an internal purpose. For boards weighing term sheets, earn-out structures or divergent growth scenarios, the Valuation Range & Scenario Review is the premium engagement. Retrospective valuation dates attract a $495 surcharge per historical date and additional entities are $750 each. Fees are fixed at engagement and never contingent on the outcome; every report is senior-reviewer signed, carries an independence statement, and the working file is retained for 10 years.