There’s a new club in B2B nobody wants to join. It was there before, this club, but it’s gotten even more members since the SaaS Crash of 2026.
A growing cohort of public B2B companies — not one or two, but twelve or more — are trading below 2.5x revenue. Many below 1x. Some below their cash on the balance sheet.
The median public SaaS company still trades around 3x revenue. So this isn’t a broad market problem. It’s a specific, structural problem that affects a specific type of company.
Let’s call them the 2x ARR Club. And I want to break down exactly who’s in it, what went wrong, and what the lessons are — because the same dynamics that put these companies here are coming for a lot more B2B companies in 2026 and beyond.
The Members
Here’s the current roster as of February 2026, ranked by EV/Revenue:
These twelve companies generate roughly $10 billion in combined annual revenue. Their combined market cap? Under $10 billion. In many cases, less than the revenue itself.
These aren’t startups. These are companies with hundreds of millions — some with billions — in recurring revenue, real customers, real products, and real employees. And the public market has essentially said: we don’t believe in your future.
7 Patterns That Put You in the Club
After digging into every one of these companies, the patterns are unmistakable. Here’s what they all share:
1. Growth Stalled or Went Negative
This is the single biggest factor. Of the twelve companies, eight are growing less than 5% or actively shrinking. The median growth rate across this group is roughly flat to slightly negative.
At that growth rate, a B2B company isn’t just “slow growing” — it’s signaling that demand is saturated, that customers are churning, or that new competitors are eating its lunch. And the market prices that in brutally.
The contrast is sharp. Five9 at +13% growth gets 2.5x. Upland at -23% gets 0.2x. Growth rate explains more variance in these multiples than any other single factor.
2. The 2020-2021 Hangover Never Ended
Every single one of these companies peaked between 2019 and 2021. Most at absurd multiples — RingCentral hit $53B on $1.5B revenue (35x!). Teladoc hit $50B. Fastly hit $12B on $300M in revenue.
The pull-forward effect from COVID was real. Remote work, telemedicine, digital everything — these companies rode a demand wave that was borrowing from 2023-2025. When that demand normalized, growth rates collapsed, and the stocks never recovered.
What’s different now versus the 2022-2023 SaaS crash is that this isn’t about interest rates anymore. Rates have come down. The S&P is near all-time highs. This group isn’t recovering because their businesses aren’t recovering. The 2022 crash was macro. The 2026 version is structural.
3. No Compelling AI Story
Here’s the one that matters most going forward. Look at what the market is rewarding in B2B right now: Palantir trades at 50x+ revenue. CrowdStrike at 20x. Even Salesforce, growing 8-9%, gets 7x because AgentForce is a credible AI narrative.
Now look at the 2x ARR Club. LivePerson literally does “conversational AI” — the category that ChatGPT exploded — and trades at 0.2x revenue. Why? Because being in an AI-adjacent category without an AI-native architecture is worse than being in no AI category at all. You’re not the disruptor. You’re the disrupted.
8×8 is doing interesting work with voice AI agents and usage-based pricing — their AI interactions are up 200% YoY. CS Disco has Cecilia AI processing 32,000 documents per hour. But the market doesn’t care about AI features bolted onto pre-AI architectures. It cares about whether AI is the core value proposition and the core growth driver. For this group, it isn’t. Not yet.
4. Negative or Unclear Path to Profitability
Here’s the cruel paradox. Many of these companies grew too fast during the boom years by spending heavily on S&M and R&D. Now they can’t grow, and they’re still not profitable.
Upland has $301M in debt. LivePerson just did a complex refinancing to avoid defaulting on convertible notes. Domo has $140M in debt against a $243M market cap. Teladoc has been writing down the $18.5B Livongo acquisition for years.
The companies that are inching toward profitability — 8×8 is generating positive operating cash flow for 20 straight quarters, CS Disco is targeting EBITDA breakeven by Q4 2026 — are still stuck in the club because profitability alone doesn’t get you out. You need growth and profitability. The Rule of 40 still matters. You can’t cut your way to a premium multiple.
5. CEO and Leadership Instability
An underrated pattern. CS Disco’s founder-CEO resigned in 2023 amid misconduct allegations. LivePerson went through a messy leadership transition. Bumble brought back founder Whitney Wolfe Herd to attempt a product reset. Upland’s acquisition-driven rollup strategy under Jack McDonald has led to a portfolio of products that lack coherence.
When you’re fighting for survival, executive stability matters more than ever. And several of these companies are on their second or third leadership team in three years, trying to execute turnarounds while also managing the existential AI transition. It’s really hard to do both simultaneously.
6. Category Headwinds From AI-Native Competitors
This is distinct from “no AI story.” Some of these companies are in categories that are actively being disrupted by AI-native players.
CS Disco competes with Harvey (valued at $11B at ~110x revenue) and Legora ($1.8B at ~50x). LivePerson competes with a flood of AI-native customer service tools. RingCentral and 8×8 face the possibility that AI agents will simply replace the human communications they’re built to facilitate. Expensify competes with AI tools that can automate expense management entirely.
When your AI-native competitor raises at 50-100x revenue and your stock trades at 1x, the talent war is over before it starts. Every engineer and salesperson with options can do the math.
7. The Liquidity Desert
Most of these companies have market caps under $1B. Several are under $300M. At that size, institutional investors can’t take meaningful positions without moving the stock. Sell-side coverage evaporates. You end up in a liquidity desert where the only exit is M&A — and the acquirers know it.
Blossom Street Ventures noted in their Q3 2025 SaaS multiples report that they’ve started removing the most distressed names — LivePerson, Upland, Yext, Fastly, Expensify — from their tracking index entirely because “they should not be used to assess multiples for a healthy company going through M&A.”
When the analysts stop tracking you, you’re not just in the 2x ARR Club. You’re in purgatory.
The Combined Destruction Is Staggering
Let me put some numbers on this:
Peak combined market cap of these 12 companies: ~$175B. That was real money, real investor capital, real 401(k) allocations. Today? Under $10B combined. That’s roughly a 95% decline in aggregate value.
And it’s not like the revenue disappeared. These companies still generate $10B+ in annual revenue. They still have thousands of employees. They still serve real customers. The revenue is worth less, not because the customers are leaving (though some are), but because the future looks fundamentally different than it did in 2021.
The Real Question: Is This Reversible?
For some of these companies, maybe. Five9 at 2.5x with 13% growth is arguably undervalued if it can accelerate. CS Disco at 0.9x with 10% growth and 77% gross margins has real assets. 8×8 is seeing genuine AI-driven product traction.
But the honest answer for most? Probably not as independent public companies.
The math is simple. To get from 1x revenue to even 5x revenue — which is still below the SaaS median — you need to either:
- Accelerate growth to 20%+ consistently, or
- Demonstrate 25%+ free cash flow margins with stable revenue, or
- Convince the market you have a genuinely differentiated AI moat
Most of this group can’t do any of those three things in the next 2-3 years. Which is why M&A will likely be the exit for the majority. Private equity is sitting on record dry powder. SaaS M&A hit a record 2,698 transactions in 2025. PE firms were involved in 58% of all SaaS deals.
The acquirers are circling. And they know the sellers don’t have leverage.
The Lessons for Every B2B Founder and CEO
This is the part that matters. Because the 2x ARR Club isn’t just a public market curiosity. It’s a preview of what happens to any B2B company — public or private — that falls into the same traps.
- Growth is still the most important thing. The difference between 1x and 6x in this data set is almost entirely explained by growth rate. You cannot optimize your way to a premium. You have to grow.
- The AI transition is not optional. You can’t bolt on AI features and call it a strategy. The market is drawing a hard line between AI-native and AI-added. If your core product was designed in 2015 and you’re layering GPT wrappers on top, the market sees through it. You need a genuine, architectural answer to how AI changes your value proposition.
- Don’t overbuild for a temporary demand spike. The companies that are hurting most right now are the ones that hired to a 2021 growth rate and never right-sized. If your growth rate is artificially elevated — by a macro tailwind, by a one-time event, by a surge in any single channel — build for the normalized rate, not the peak.
- Capital structure matters in a downturn. Upland’s $300M in debt, LivePerson’s convertible note crisis, Domo’s negative equity — these aren’t just abstract balance sheet items. They’re existential threats when your market cap drops below your debt. If you can raise equity at favorable terms, do it. Cash buys time, and time is what you need to make the AI transition.
- The “middle” is the most dangerous place. Companies like Yext ($448M revenue, 5% growth, 1.3x multiple) are too big to pivot fast, too small to dominate, and too slow-growing to attract investor interest. They have scale but no momentum. In the old world, that got you a 4-6x multiple. In the AI-first world, it might get you 1x.
The 2x ARR Club: When the Markets Have Given Up On You
Here’s the number I keep coming back to: in February 2026, the median public SaaS company trades at about 3x revenue. The average is 4.8x. And there are twelve companies — real companies, with real revenue, real products, real customers — trading below 2.5x. Several below 1x.
The 2x ARR Club is the public market’s way of saying: we don’t believe your future is bigger than your present.
For founders still building: grow. Build AI-native, not AI-added. Don’t over-hire for temporary tailwinds. Keep your capital structure clean.
Because once you’re in the 2x ARR Club, it’s very hard to get out.
Not investment advice. Data approximate as of Feb 2026.
