The Rule of 40 is a financial benchmark for software companies, stating that their annual revenue growth rate plus profit margin should equal or exceed 40%. It’s highly relevant because it assesses a company’s health by balancing the critical trade-off between aggressive, often cash-burning, growth and immediate profitability. This single metric provides investors with a quick way to gauge a software firm’s operational efficiency and potential for sustainable, long-term value. You can learn more eg. on this McKinsey overview article SaaS and the Rule of 40: Keys to the critical value creation metric.
Below we display a subset of listed tech companies by their rule of 40 performance. You also have the option to add your own company to the chart:
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Company Data
| Company (Ticker) | Revenue Growth Rate (%) | EBIT Margin (%) | Rule of 40 Score | Revenue Multiple |
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Disclaimer
This document contains live data research derived from public information issued by listed companies, provided for informational purposes only. Delux Group Management, Development & Holding GmbH (“DELUX”) has not independently verified this data and makes no representation as to its accuracy or completeness. Accordingly, DELUX accepts no liability for the information itself or for any actions taken in reliance upon it. This material is not investment advice and is not to be used as the basis for any financial decision, as any projections are based on unverified data and are not a representation of future performance.