The Vertical Edge — June 2026

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The vertical software premium over horizontal stands at +55% on EV/Revenue (LTM, median) and +66% on EV/EBITDA - up 8 and 12 points versus May. On a forward (NTM) basis the revenue premium is ~+58%, up from +44% at the end of Q1.

What moved

• Vertical software's EV/Revenue premium sits at +55% (LTM, median), up 8 points month-over-month, re-widening after May's pullback from the +86% April peak.
• The EV/EBITDA premium widened to +66% - vertical's margin edge is repricing harder than its revenue edge.
• On a forward (NTM) basis the premium is ~+58% on revenue, up from +44% at Q1 as horizontal estimates were cut faster.

What it means

• We believe the market keeps pricing AI-substitution risk into undifferentiated horizontal software while paying up for domain-specific systems.
• May's pullback from the April spike reversed in June - a re-widening within the established regime, with the forward spread at the wide end of its range.

The Vertical Premium Monitor - June 2026. Source: S&P Capital IQ; as of June 30, 2026.

Source: S&P Capital IQ. Lateral Universe - 24 vertical and 30 horizontal application SaaS companies. Premium = (vertical median ÷ horizontal median) − 1; medians used to exclude outlier effects. As of June 30, 2026. For informational purposes only; not investment advice or an offer of any security.

The views expressed in this white paper are the best-faith views of the principals of Lateral. This document is not primary research and should not be treated as such. Any such information regarding market forecasts and/or segmentation does not relate specifically to any investment strategy or offering of Lateral. This document is for informational purposes only and reflects the views of Lateral Investment Management as of the date of publication. It does not constitute investment, legal, or tax advice, nor an offer to sell or a solicitation of an offer to buy any security. Past performance is not indicative of future results.

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