Here's how "off" forward estimates are for the leading SaaS businesses (which to me implies the forward multiples are artificially inflated and these businesses will grow into their multiples much faster). Twilio's NTM rev consensus estimate is $1.7B. LTM rev was $1.6B. 5% growth

Forward estimates have not been revised after they reported yesterday, but still the effect of one quarter should not be this drastic. They'll clearly grow >> 5% over the next year. Their LTM growth rate was 83%

Their current NTM rev multiple (with current estimates of 5% forward growth) is 23x. Clearly estimates will be revised up after this quarter. So what's the right forward growth rate? 40-50%? Using 40% (which I STILL think is quite conservative) gives them a 17x forward multiple

Looking at their multiple this way, it starts to look a whole lot more "sustainable" or even cheap. Play this forward one more year and the multiple starts to look even lower. In just 2 years we could see significant multiple compression combined, WITH stock price appreciation

My bigger point- The best SaaS businesses, the ones I call my Secular Growth Stars, are able to sustain much higher growth rates at scale. They'll grow into these multiples much faster than people anticipate. This is another way of saying I think current multiples are justifiable

BUT - not all SaaS companies are included in this upper tier. Just look at what happened to New Relic today. They similarly benefited from the rising tide lifting all SaaS stocks (they doubled from covid lows). But when they failed to deliver their stock cratered 25%

We'll see a lot more earnings that look like New Relic's before Q2 earnings season is over. But I also think we'll start to see the Secular Growth Stars separate from the pack and further cement their dominance