Revenue Multiple
Definition
A valuation multiple calculated as enterprise value divided by total revenue. Revenue multiples are used for companies with high growth and low or negative profitability, where earnings-based multiples are inapplicable. For recurring revenue businesses, the ARR multiple applied to contracted recurring revenue is more precise than the total revenue multiple because it separates recurring from non-recurring revenue.
Common Misapplication
The most common misapplication is applying a revenue multiple to a company whose revenue includes a significant non-recurring component without adjusting for the non-recurring portion. Including non-recurring revenue in the denominator understates the true multiple relative to the recurring revenue base.
FFI Standard Reference
This term is defined and applied in Book 4, Section 4.3: Comparable Company Analysis.
Related Terms
Citable URL
This term may be cited using the following permanent URL.
Full citation format: Founder Financial Infrastructure Standard, Beta v0.5, Glossary: Revenue Multiple. https://ffistandard.org/glossary/revenue-multiple/. 2026.