Communications
Communications SaaS includes cloud UCaaS, CPaaS, video conferencing, and messaging platforms. This sector has faced significant post-COVID normalization as usage growth from the pandemic period has partially reversed. NRR and net new ARR trends are the most important indicators to monitor across this sector's 6 public companies.
What drives multiples in Communications
Multiples in Communications SaaS are driven primarily by net new ARR growth and NRR, since the category normalized sharply post-pandemic. Investors discount companies with declining net retention and reward those that can demonstrate platform stickiness across voice, video, and messaging. Seat expansion into enterprise accounts and international growth are the two levers watched most closely.
Top performers in this sector
Sector vs. all public SaaS
6 Companies
Bandwidth Inc.
Five9, Inc.
RingCentral, Inc.
Twilio Inc.
Weave Communications, Inc.
Zoom Communications, Inc.
Sector Insights
Below-average efficiency
The Communications sector averages a Rule of 40 score of 26, below the 35-point threshold that distinguishes efficient SaaS businesses. Higher go-to-market intensity or infrastructure costs relative to growth are common drivers.
Valuation discount
Median EV/Revenue of 2.9x is more than 20% below the all-SaaS median of 5.1x. The market may be pricing in lower growth expectations, margin headwinds, or increased competitive pressure in this category.
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