What the data shows this week
The median Rule of 40 score across all 500+ public SaaS companies tracked by SaaSDB sits at 31.4 — roughly flat versus the prior month. But that headline number masks a significant divergence by sector. Security SaaS companies (CrowdStrike, Zscaler, Palo Alto, SentinelOne) are averaging a Rule of 40 of 54, driven by a combination of 20–30% revenue growth and improving FCF margins as their platforms mature. Collaboration tools, meanwhile, are averaging 18 — weighed down by slowing growth post-pandemic normalization and continued investment in AI features.
Why this matters for founders
If you're benchmarking your own Rule of 40, sector context matters as much as the raw number. A Rule of 40 of 35 in security puts you below the sector median. The same score in collaboration puts you near the top. The SaaSDB Benchmark Compare Tool lets you see your percentile against the full dataset — but sector-specific benchmarks give you a more honest view of where you stand relative to your direct peer group.
One metric to watch
CrowdStrike's FCF margin expanded from 28% to 34% over the past four quarters while revenue growth held at 31%. That's the compounding story that takes a Rule of 40 score from good to elite. Most companies expanding FCF margin at that rate are doing it by cutting S&M — CrowdStrike is doing it through platform consolidation (customers adding modules rather than requiring new sales cycles). Worth watching as an indicator of where durable Rule of 40 improvement comes from.