valuation
A revenue multiple prices the firm off the top line, almost always as EV/revenue (or EV/ARR in subscription businesses). It is used when earnings are negative, early, or incomparable—and it is dangerous when margins differ.
A revenue multiple is:
Revenue multiple = enterprise value / revenue
(or ARR, GMV, or net revenue—named, not mixed). It exists because EBITDA can be negative, owner-distorted, or non-comparable across business models. Growth equity, marketplaces, and turnarounds live here. Mature cash compounders should not: an EBITDA multiple (or DCF) carries more information once margins are stable.
Algebra: EV/Sales = (EV/EBITDA) × EBITDA margin. A 10x sales name with a 10% long-run margin is a 100x EBITDA story in disguise. If you would not pay 100x EBITDA, you should not pay 10x sales without a path to much higher margins.
EV/Revenue is the same ratio with a more formal label; this page is about the pricing habit of "times sales".
Nimbus Pay is invented, illustration only. ARR €18.0m; growth 32%; not yet at target margin; net debt €2.0m cash-rich (net cash €4.5m).
| Item | Figure |
|---|---|
| Selected EV / ARR | 6.5x (growth and NRR vs a tight comparable set) |
| Implied EV | €117m |
| Equity value after net cash | €121.5m |
| Implied if long-run EBITDA margin is 25% | Equivalent to ~26x terminal EBITDA if ARR equals revenue — high, needs growth to persist |
| Cross-check | Rule-of-40 style: 32% growth + (−4%) margin = 28; multiple should sit below efficient 40+ peers |
Illustration only: a 6.5x ARR is not a law. If gross margin were 45% instead of 75%, the same multiple would be reckless.
Venture and growth investors underwrite revenue multiples against retention, payback and a path to FCF. Strategics may pay a revenue multiple for distribution or data they can margin in their own P&L. In auctions, revenue-multiple bids without a margin bridge are how winners overpay and then miss the plan.
Revenue does not pay debt. Two firms with equal sales and unequal working-capital cycles have unequal worth. In downturns, revenue multiples compress violently because they embed growth that can disappear in a quarter.
Dazur uses revenue multiples as a constraint and a language for growth assets, then insists on a path to cash: gross margin, S&M efficiency, and a year in which free cash flow turns sustainably positive. Times-sales without that path is a slogan we will not take to a serious buyer.