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A dollar is a dollar is a dollar, right? Not quite. Not all revenue dollars are created equal, but all gross profit dollars are. Gross profit, not revenue, is the metric companies should be using to compare themselves. Ultimately, gross profits account for more than 55% of the forward multiple of publicly traded SaaS companies after normalizing for revenue growth.
SaaS companies vary hugely in their gross margins. BenefitFocus, Five9 and Shopify operate at 45-55% gross margins.
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