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Rule of 40 Benchmarks

Public SaaS Companies — 29 companies tracked

Median Score39.0

Scoring 40+14

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Ranked Rule of 40 Data

#	Company	Ticker	Sector	Rule of 40	Rev Growth	FCF Margin
1	VS Veeva Systems Inc.	VEEV	Vertical SaaS	60.5	16.3%	44.2%
2	DI Datadog, Inc.	DDOG	DevTools & Observability	56.9	27.7%	29.2%
3	SI ServiceNow, Inc.	NOW	IT Service Management	55.3	20.9%	34.5%
4	SI Snowflake Inc.	SNOW	Data & Analytics	53.1	29.2%	23.9%
5	GI GitLab Inc.	GTLB	DevTools & Observability	49.0	25.8%	23.2%
6	TT The Trade Desk, Inc.	TTD	Marketing Tech	45.9	18.5%	27.5%
7	PI Pegasystems Inc.	PEGA	Low-Code / No-Code	44.7	16.6%	28.1%
8	SI Salesforce, Inc.	CRM	CRM & Sales	44.3	9.6%	34.7%
9	ZC Zoom Communications, Inc.	ZM	Communications	43.9	4.4%	39.5%
10	MI MongoDB, Inc.	MDB	Data & Analytics	43.1	22.8%	20.3%
11	PH Paylocity Holding Corporation	PCTY	HR Tech	42.4	14.8%	27.5%
12	WI Workday, Inc.	WDAY	HR Tech	42.2	13.1%	29.1%
13	OI Okta, Inc.	OKTA	Security	41.8	11.8%	30.0%
14	HI HubSpot, Inc.	HUBS	Marketing Tech	41.8	19.2%	22.6%
15	ZT ZoomInfo Technologies Inc.	ZI	Sales Intelligence	39.0	2.9%	36.1%
—	Median Benchmark	—	All Sectors	39.0	—	—
16	BI Box, Inc.	BOX	Cloud Storage	37.8	8.0%	29.8%
17	BH Bill.com Holdings, Inc.	BILL	Fintech	37.0	13.4%	23.7%
18	DI Dropbox, Inc.	DBX	Cloud Storage	35.9	-1.1%	36.9%
19	DH DigitalOcean Holdings, Inc.	DOCN	Cloud Infrastructure	35.5	15.5%	20.0%
20	EN Elastic N.V.	ESTC	DevTools & Observability	34.7	17.0%	17.6%
21	TI Toast, Inc.	TOST	Vertical SaaS	34.5	24.1%	10.5%
22	TI Twilio Inc.	TWLO	Communications	32.5	13.7%	18.9%
23	SI SentinelOne, Inc.	S	Security	29.5	21.9%	7.6%
24	RI RingCentral, Inc.	RNG	Communications	28.1	4.8%	23.4%
25	CI Confluent, Inc.	CFLT	Data & Analytics	26.3	21.1%	5.2%
26	AC Appian Corporation	APPN	Low-Code / No-Code	26.0	17.8%	8.2%
27	NR New Relic, Inc.	NEWR	DevTools & Observability	23.3	17.8%	5.5%
28	WI WEX Inc.	WEX	Fintech	15.8	-1.2%	17.0%
29	DI Domo, Inc.	DOMO	Data & Analytics	-0.1	0.6%	-0.6%

What is the Rule of 40?

The Rule of 40 was popularized by venture capitalist Brad Feld as a quick health check for SaaS companies. The idea: add your annual revenue growth rate (%) to your profit margin (%). If the sum is 40 or above, the company is healthy — whether it prioritizes growth or profitability.

Formula: Rule of 40 = Revenue Growth Rate (%) + FCF Margin (%)

Interpretation: A company growing 60% YoY with −20% FCF margin scores 40. A company growing 20% with 20% FCF margin also scores 40. Both are considered balanced. Companies scoring below 40 may be burning cash without commensurate growth.