Software Index
State of the Market
Upward momentum continued in 2024, with the S&P 500 reaching its all-time high and the NASDAQ 100 following suit. However, the Scalar Software Index's top 10 median next-twelve-month ("NTM") revenue multiple declined by 2.1% month-over-month to 15.0X, and the Scalar Software Index median NTM revenue multiple declined by 4.7% to 5.6X.
The US Bureau of Labor Statistics reported that the Consumer Price Index (CPI) increased by 3.1% in January, and total nonfarm payroll employment rose by 353,000 in January, leaving the unemployment rate flat at 3.7%. Both results were stronger than expected and resulted in economists reforecasting the number of potential federal funds rate cuts expected this year.
According to AlleyWatch, $6.1B was invested in US venture-backed companies in January, in more than 470 deals. This marked a 10.5% decline from January 2023 but an increase of 21.4% from December 2023.
As the private markets continue to struggle to regain their footing, and the absence of an active M&A environment for venture-backed companies persists, venture funds are actively looking for ways to increase their distributed paid-in capital (DPI) by engaging in secondary sales of some of their portfolio companies. We anticipate this trend to continue as limited partners focus on a GP's ability to return capital versus merely reporting unrealized returns. We believe this focus will create increased opportunities for secondary funds.
Median
NTM Rev Multiple
5.6x
Top 10*
NTM Rev Multiple
15.0x
Median
NTM Rev Growth
11%
Top 10*
NTM Rev Growth
27%
Median
Gross Margin
75%
Top 10*
Gross Margin
75%
*Median multiple, growth rate, and gross margin for the top 10 companies based on EV/NTM Revenue.
Valuation Trends
Index Leaders
Top 10 companies in the Software Index based on current EV / NTM Revenue Multiple.
|
Company
|
EV/NTM Rev
|
EV ($MM)
|
LTM Rev $MM
|
NTM Rev Growth
|
LTM Rev Growth
|
Gross Margin
|
Operating Margin
|
FCF Margin
|
|---|---|---|---|---|---|---|---|---|
| CrowdStrike Holdings, Inc. | 18.3x | 67,903 | 2,848 | 30.1% | 40% | 75% | -3% | 36% |
| Snowflake Inc. | 17.8x | 60,225 | 2,621 | 29.1% | 41% | 67% | -40% | 36% |
| Cloudflare, Inc. | 17.1x | 26,388 | 1,209 | 28.0% | 35% | 76% | -16% | 18% |
| Datadog, Inc. | 16.2x | 39,431 | 2,008 | 21.6% | 31% | 80% | -5% | 26% |
| Zscaler, Inc. | 15.3x | 33,858 | 1,758 | 26.0% | 45% | 77% | -12% | 33% |
| MongoDB, Inc. | 14.8x | 28,214 | 1,586 | 20.2% | 33% | 75% | -15% | 14% |
| Atlassian Corporation | 14.7x | 63,462 | 3,705 | 16.2% | 24% | 82% | -6% | 30% |
| GitLab Inc. | 14.7x | 10,129 | 539 | 27.6% | 42% | 89% | -35% | 65% |
| Samsara Inc. | 14.6x | 16,217 | 848 | 30.9% | 43% | 73% | -30% | 16% |
| Manhattan Associates, Inc. | 14.4x | 14,680 | 929 | 10.1% | 21% | 54% | 23% | 26% |
| ServiceNow, Inc. | 14.2x | 154,314 | 8,971 | 21.5% | 24% | 79% | 8% | 36% |
| Adobe Inc. | 12.8x | 275,475 | 19,409 | 10.8% | 10% | 88% | 34% | 34% |
| Palantir Technologies Inc. | 12.7x | 32,046 | 2,125 | 19.0% | 16% | 80% | 2% | 21% |
| Shopify Inc. | 12.5x | 99,217 | 6,651 | 19.0% | 27% | 49% | -2% | 6% |
| HubSpot, Inc. | 12.4x | 29,942 | 2,058 | 17.5% | 26% | 84% | -5% | 18% |
| The Descartes Systems Group Inc. | 11.8x | 7,202 | 550 | 11.1% | 16% | 76% | 28% | 38% |
| Microsoft Corporation | 11.5x | 2,984,569 | 227,583 | 14.4% | 12% | 70% | 45% | 26% |
| SPS Commerce, Inc. | 10.9x | 6,521 | 514 | 16.2% | 19% | 66% | 14% | 22% |
| Qualys, Inc. | 10.9x | 6,530 | 541 | 10.9% | 15% | 80% | 28% | 39% |
| monday.com Ltd. | 10.5x | 9,150 | 677 | 28.6% | 46% | 89% | -7% | 24% |
| Dynatrace, Inc. | 10.5x | 16,155 | 1,297 | 18.6% | 25% | 83% | 9% | 24% |
| DoubleVerify Holdings, Inc. | 10.0x | 6,630 | 534 | 24.3% | 26% | 81% | 14% | 15% |
| SentinelOne, Inc. | 9.5x | 7,229 | 573 | 32.6% | 58% | 70% | -69% | 18% |
| Braze, Inc. | 9.3x | 5,020 | 440 | 23.3% | 34% | 69% | -34% | 16% |
| Workday, Inc. | 9.0x | 72,947 | 6,983 | 16.3% | 17% | 75% | 0% | 25% |
| Clearwater Analytics Holdings, Inc. | 8.9x | 3,757 | 352 | 19.6% | 21% | 71% | -3% | 26% |
| Sprout Social, Inc. | 8.5x | 3,407 | 310 | 29.0% | 30% | 77% | -21% | 21% |
| Elastic N.V. | 8.3x | 11,288 | 1,159 | 16.9% | 19% | 74% | -11% | 22% |
| Freshworks Inc. | 8.0x | 5,422 | 569 | 18.4% | 21% | 82% | -33% | 25% |
| JFrog Ltd. | 7.3x | 2,934 | 329 | 21.8% | 25% | 78% | -23% | 26% |
| Salesforce, Inc. | 7.3x | 273,991 | 33,954 | 10.5% | 12% | 75% | 16% | 34% |
| Klaviyo, Inc. | 7.3x | 6,018 | 642 | 29.3% | 0% | 74% | -45% | 0% |
| Workiva Inc. | 7.2x | 5,031 | 607 | 15.6% | 18% | 75% | -15% | 13% |
| Oracle Corporation | 7.0x | 387,666 | 51,628 | 7.5% | 12% | 72% | 29% | 24% |
| Confluent, Inc. | 6.9x | 6,126 | 732 | 21.3% | 36% | 69% | -65% | 10% |
| Ceridian HCM Holding Inc. | 6.8x | 11,466 | 1,450 | 15.9% | 22% | 48% | 10% | 12% |
| C3.ai, Inc. | 6.6x | 2,211 | 285 | 17.0% | 6% | 61% | -105% | -25% |
| Constellation Software Inc. | 6.5x | 61,459 | 7,932 | 19.2% | 29% | 35% | 14% | 28% |
| Splunk Inc. | 6.4x | 27,421 | 3,981 | 8.4% | 20% | 79% | 4% | 26% |
| BlackLine, Inc. | 6.1x | 3,871 | 574 | 11.2% | 15% | 75% | -3% | 19% |
| BILL Holdings, Inc. | 6.0x | 7,597 | 1,134 | 11.2% | 50% | 86% | -23% | 6% |
| Tenable Holdings, Inc. | 6.0x | 5,232 | 770 | 13.4% | 19% | 77% | -6% | 21% |
| Paylocity Holding Corporation | 5.9x | 8,663 | 1,239 | 17.9% | 34% | 69% | 15% | 21% |
| Informatica Inc. | 5.9x | 9,756 | 1,549 | 6.6% | 2% | 79% | 3% | 30% |
| Paycom Software, Inc. | 5.8x | 10,522 | 1,630 | 11.5% | 26% | 87% | 28% | 21% |
| VTEX | 5.6x | 1,303 | 186 | 24.0% | 25% | 68% | -13% | 7% |
| DigitalOcean Holdings, Inc. | 5.6x | 4,175 | 675 | 9.9% | 27% | 60% | 4% | 20% |
| Docebo Inc. | 5.6x | 1,168 | 171 | 22.9% | 27% | 81% | 2% | 18% |
| Five9, Inc. | 5.6x | 5,610 | 880 | 14.6% | 18% | 53% | -9% | 25% |
| ZoomInfo Technologies Inc. | 5.6x | 6,989 | 1,225 | 2.5% | 20% | 89% | 21% | 38% |
| Couchbase, Inc. | 5.4x | 1,051 | 172 | 13.8% | 16% | 87% | -46% | 7% |
| Okta, Inc. | 5.4x | 12,957 | 2,168 | 11.3% | 25% | 74% | -25% | 34% |
| PROS Holdings, Inc. | 5.4x | 1,757 | 297 | 10.1% | 10% | 62% | -18% | 6% |
| Asana, Inc. | 5.2x | 3,629 | 632 | 10.8% | 24% | 90% | -45% | 11% |
| Smartsheet Inc. | 5.1x | 5,612 | 914 | 19.6% | 28% | 80% | -16% | 27% |
| Paycor HCM, Inc. | 5.1x | 3,411 | 578 | 16.7% | 27% | 66% | -16% | 20% |
| HashiCorp, Inc. | 4.8x | 3,039 | 563 | 11.8% | 29% | 81% | -46% | 4% |
| Dropbox, Inc. | 4.7x | 11,906 | 2,465 | 3.4% | 8% | 81% | 14% | 31% |
| AvidXchange Holdings, Inc. | 4.6x | 1,935 | 363 | 17.0% | 21% | 66% | -19% | -1% |
| PagerDuty, Inc. | 4.5x | 2,068 | 421 | 10.6% | 21% | 82% | -21% | 25% |
| Progress Software Corporation | 4.3x | 3,113 | 694 | 4.9% | 15% | 86% | 19% | 30% |
| Appian Corporation | 4.2x | 2,499 | 526 | 12.2% | 18% | 73% | -25% | -4% |
| Amplitude, Inc. | 4.2x | 1,228 | 270 | 7.7% | 22% | 73% | -36% | 15% |
| Q2 Holdings, Inc. | 4.1x | 2,750 | 609 | 9.7% | 11% | 47% | -16% | 16% |
| DocuSign, Inc. | 4.1x | 11,668 | 2,709 | 5.6% | 11% | 79% | 2% | 36% |
| Jamf Holding Corp. | 4.0x | 2,494 | 540 | 14.4% | 19% | 80% | -21% | 25% |
| Box, Inc. | 4.0x | 4,300 | 1,031 | 3.7% | 7% | 75% | 5% | 33% |
| Alteryx, Inc. | 4.0x | 4,081 | 920 | 11.3% | 26% | 86% | -24% | 9% |
| SolarWinds Corporation | 3.9x | 2,996 | 748 | 3.3% | 4% | 90% | 27% | 39% |
| Enghouse Systems Limited | 3.8x | 1,375 | 327 | 11.2% | 6% | 67% | 19% | 30% |
| Sprinklr, Inc. | 3.6x | 2,791 | 703 | 11.3% | 20% | 76% | 2% | 10% |
| International Business Machines Corporation | 3.4x | 214,625 | 61,860 | 3.0% | 2% | 55% | 15% | 19% |
| Open Text Corporation | 3.4x | 19,769 | 5,058 | 15.9% | 44% | 76% | 15% | 37% |
| EverCommerce Inc. | 3.2x | 2,283 | 668 | 7.2% | 12% | 66% | 0% | 19% |
| American Software, Inc. | 3.1x | 303 | 121 | -18.2% | 0% | 59% | 7% | 14% |
| Pegasystems Inc. | 3.0x | 4,319 | 1,355 | 7.2% | 9% | 72% | 0% | 14% |
| Zoom Video Communications, Inc. | 2.9x | 13,254 | 4,499 | 2.0% | 3% | 76% | 8% | 36% |
| Zuora, Inc. | 2.6x | 1,215 | 424 | 9.1% | 11% | 65% | -14% | 19% |
| Twilio Inc. | 2.3x | 10,070 | 4,103 | 4.8% | 13% | 49% | -13% | 10% |
| WalkMe Ltd. | 2.2x | 615 | 264 | 5.9% | 13% | 82% | -28% | 3% |
| BigCommerce Holdings, Inc. | 2.2x | 707 | 298 | 10.7% | 10% | 75% | -25% | 0% |
| RingCentral, Inc. | 2.0x | 4,784 | 2,156 | 9.1% | 13% | 70% | -10% | 17% |
| Upland Software, Inc. | 1.7x | 490 | 304 | -4.9% | -3% | 67% | -7% | 23% |
| Asure Software, Inc. | 1.7x | 196 | 122 | -4.4% | 39% | 73% | 1% | 14% |
| Yext, Inc. | 1.6x | 662 | 405 | -0.1% | 1% | 77% | -4% | 15% |
| eGain Corporation | 1.6x | 159 | 97 | 1.5% | 2% | 71% | 4% | 13% |
| Domo, Inc. | 1.5x | 473 | 318 | 0.7% | 6% | 77% | -18% | 9% |
| Rackspace Technology, Inc. | 1.3x | 3,713 | 3,024 | -5.6% | -3% | 23% | -1% | 20% |
| Kaltura, Inc. | 1.3x | 218 | 175 | -1.5% | 4% | 64% | -23% | 8% |
| Riskified Ltd. | 1.2x | 399 | 293 | 10.0% | 16% | 50% | -30% | 4% |
| Veritone, Inc. | 1.0x | 131 | 137 | -2.3% | -15% | 79% | -51% | 21% |
| Expensify, Inc. | 0.8x | 114 | 159 | -10.7% | -4% | 58% | -18% | 12% |
| ON24, Inc. | 0.8x | 110 | 171 | -14.0% | -13% | 73% | -32% | 10% |
| Top 10 Average | 15.8x | 36,051 | 1,805 | 24.0% | 36% | 75% | -14% | 30% |
| Top 10 Median | 15.0x | 31,036 | 1,672 | 26.8% | 38% | 75% | -13% | 28% |
| Overall Average | 6.8x | 57,116 | 5,533 | 12.5% | 19% | 72% | -9% | 20% |
| Overall Median | 5.6x | 5,422 | 694 | 11.3% | 19% | 75% | -6% | 20% |
Multiples by Growth Tranche
Valuation multiples are strongly correlated to expected growth. Scalar has selected the tranches based on current market conditions.
EV/NTM Revenue Multiple
High Growth (> 25%)
14.7x
|
|
Multiple
|
Growth
|
|---|---|---|
| SentinelOne, Inc. | 9.5x | 32.6% |
| Samsara Inc. | 14.6x | 30.9% |
| CrowdStrike Holdings, Inc. | 18.3x | 30.1% |
| Klaviyo, Inc. | 7.3x | 29.3% |
| Snowflake Inc. | 17.8x | 29.1% |
| Sprout Social, Inc. | 8.5x | 29.0% |
| monday.com Ltd. | 10.5x | 28.6% |
| Cloudflare, Inc. | 17.1x | 28.0% |
| GitLab Inc. | 14.7x | 27.6% |
| Zscaler, Inc. | 15.3x | 26.0% |
EV/NTM Revenue Multiple
Average Growth (15%-25%)
8.2x
|
|
Multiple
|
Growth
|
|---|---|---|
| DoubleVerify Holdings, Inc. | 10.0x | 24.3% |
| VTEX | 5.6x | 24.0% |
| Braze, Inc. | 9.3x | 23.3% |
| Docebo Inc. | 5.6x | 22.9% |
| JFrog Ltd. | 7.3x | 21.8% |
| Datadog, Inc. | 16.2x | 21.6% |
| ServiceNow, Inc. | 14.2x | 21.5% |
| Confluent, Inc. | 6.9x | 21.3% |
| MongoDB, Inc. | 14.8x | 20.2% |
| Clearwater Analytics Holdings, Inc. | 8.9x | 19.6% |
| Smartsheet Inc. | 5.1x | 19.6% |
| Constellation Software Inc. | 6.5x | 19.2% |
| Shopify Inc. | 12.5x | 19.0% |
| Palantir Technologies Inc. | 12.7x | 19.0% |
| Dynatrace, Inc. | 10.5x | 18.6% |
| Freshworks Inc. | 8.0x | 18.4% |
| Paylocity Holding Corporation | 5.9x | 17.9% |
| HubSpot, Inc. | 12.4x | 17.5% |
| C3.ai, Inc. | 6.6x | 17.0% |
| AvidXchange Holdings, Inc. | 4.6x | 17.0% |
| Elastic N.V. | 8.3x | 16.9% |
| Paycor HCM, Inc. | 5.1x | 16.7% |
| Workday, Inc. | 9.0x | 16.3% |
| SPS Commerce, Inc. | 10.9x | 16.2% |
| Atlassian Corporation | 14.7x | 16.2% |
| Ceridian HCM Holding Inc. | 6.8x | 15.9% |
| Open Text Corporation | 3.4x | 15.9% |
| Workiva Inc. | 7.2x | 15.6% |
EV/NTM Revenue Multiple
Low Growth (< 15%)
4.1x
|
|
Multiple
|
Growth
|
|---|---|---|
| Five9, Inc. | 5.6x | 14.6% |
| Jamf Holding Corp. | 4.0x | 14.4% |
| Microsoft Corporation | 11.5x | 14.4% |
| Couchbase, Inc. | 5.4x | 13.8% |
| Tenable Holdings, Inc. | 6.0x | 13.4% |
| Appian Corporation | 4.2x | 12.2% |
| HashiCorp, Inc. | 4.8x | 11.8% |
| Paycom Software, Inc. | 5.8x | 11.5% |
| Alteryx, Inc. | 4.0x | 11.3% |
| Sprinklr, Inc. | 3.6x | 11.3% |
| Okta, Inc. | 5.4x | 11.3% |
| Enghouse Systems Limited | 3.8x | 11.2% |
| BILL Holdings, Inc. | 6.0x | 11.2% |
| BlackLine, Inc. | 6.1x | 11.2% |
| The Descartes Systems Group Inc. | 11.8x | 11.1% |
| Qualys, Inc. | 10.9x | 10.9% |
| Adobe Inc. | 12.8x | 10.8% |
| Asana, Inc. | 5.2x | 10.8% |
| BigCommerce Holdings, Inc. | 2.2x | 10.7% |
| PagerDuty, Inc. | 4.5x | 10.6% |
| Salesforce, Inc. | 7.3x | 10.5% |
| Manhattan Associates, Inc. | 14.4x | 10.1% |
| PROS Holdings, Inc. | 5.4x | 10.1% |
| Riskified Ltd. | 1.2x | 10.0% |
| DigitalOcean Holdings, Inc. | 5.6x | 9.9% |
| Q2 Holdings, Inc. | 4.1x | 9.7% |
| RingCentral, Inc. | 2.0x | 9.1% |
| Zuora, Inc. | 2.6x | 9.1% |
| Splunk Inc. | 6.4x | 8.4% |
| Amplitude, Inc. | 4.2x | 7.7% |
| Oracle Corporation | 7.0x | 7.5% |
| EverCommerce Inc. | 3.2x | 7.2% |
| Pegasystems Inc. | 3.0x | 7.2% |
| Informatica Inc. | 5.9x | 6.6% |
| WalkMe Ltd. | 2.2x | 5.9% |
| DocuSign, Inc. | 4.1x | 5.6% |
| Progress Software Corporation | 4.3x | 4.9% |
| Twilio Inc. | 2.3x | 4.8% |
| Box, Inc. | 4.0x | 3.7% |
| Dropbox, Inc. | 4.7x | 3.4% |
| SolarWinds Corporation | 3.9x | 3.3% |
| International Business Machines Corporation | 3.4x | 3.0% |
| ZoomInfo Technologies Inc. | 5.6x | 2.5% |
| Zoom Video Communications, Inc. | 2.9x | 2.0% |
| eGain Corporation | 1.6x | 1.5% |
| Domo, Inc. | 1.5x | 0.7% |
| Yext, Inc. | 1.6x | -0.1% |
| Kaltura, Inc. | 1.3x | -1.5% |
| Veritone, Inc. | 1.0x | -2.3% |
| Asure Software, Inc. | 1.7x | -4.4% |
| Upland Software, Inc. | 1.7x | -4.9% |
| Rackspace Technology, Inc. | 1.3x | -5.6% |
| Expensify, Inc. | 0.8x | -10.7% |
| ON24, Inc. | 0.8x | -14.0% |
| American Software, Inc. | 3.1x | -18.2% |
EV/NTM Revenue Multiple - Top Quartile
NTM Revenue Multiple and NTM Growth Rate for the top quartile of companies in the Scalar Software Index, ordered by NTM Growth Rate.
Pre- & Post- Money Deals
Averages for the trailing 6 months of successful software and SAAS fundraising, including rounds Series A through Series D.
Average
Deal Size
- Series A$9.0B
- Series B$24.0B
- Series C$51.0B
- Series D$126.2B
Average
Pre Money Valuation
- Series A$48.8B
- Series B$132.9B
- Series C$187.0B
- Series D$1,823.3B
Average
Post Money Valuation
- Series A$57.3B
- Series B$156.0B
- Series C$226.0B
- Series D$2,000.0B
The data for the Scalar Software Index is collected based on market data on the last trading day of the previous month.
Metric definitions:
- EV/NTM Rev: Enterprise value to next twelve months revenue.
- EV $MM: Enterprise value, calculated as the market value of equity plus net debt and minority interest, in millions of USD.
- LTM Rev $MM: The last twelve months revenue in millions of USD.
- NTM Rev Growth: The expected growth rate of revenue for the next twelve months.
- LTM Rev Growth: The growth rate of revenue over the last twelve months.
- Gross Margin: The percentage calculated from gross profit over revenue.
- Operating Margin: The percentage calculated from operating income (EBIT) over revenue.
- FCF Margin: The percentage calculated from unlevered free cash flow over revenue.
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Data Sources: S&P Global Market Intelligence and PitchBook Data, Inc.
Enterprise Software Operating Metrics provided by Public Comps.