Software Index
State of the Market
The Scalar Software Index's next twelve months (NTM) top-10 revenue multiple is down 2.6% month over month to 14.6X, and the Scalar Software Index NTM median revenue multiple is down 5.7% month over month to 5.6X. Market concerns about the Federal Reserve’s delay in lowering rates and hawkish commentary from various members of the Federal Reserve Board influenced the pullback in growth stocks, including many software companies in the Scalar Software Index.
Notwithstanding, the Bureau of Labor Statistics released its Consumer Price Index (CPI) results from April, which increased only 0.3%, or 3.4% annualized, versus March’s increase of 0.4%, or 3.5% annualized. The markets rallied on the good news, with the NASDAQ reaching its all-time high, and the Dow, which consists of 30 companies considered to be leaders in their respective industries, surpassing 40,000 for the first time ever.
The pre-IPO market continues to lag, primarily due to valuation expectations. While talking heads indicate the IPO market isn’t open, Arm, Instacart, Reddit, and Astera Labs recently went public, with all stocks currently trading higher than their respective offering prices. However, aside from Astera Labs, the other three technology companies went public at a price below their most recent pre-IPO private round of funding, which is the crux of the issue. Many private technology company unicorns have plenty of cash on their balance sheets, having raised large sums of capital during the zero-interest-rate policy (ZIRP) of 2020 and 2021; they don’t have a pressing need to go public or raise additional private funding, especially if it means a significant down round. Therefore, many of these companies will continue to operate privately until their financial performance results in favorable valuations relative to current multiples (2021 LTM EV/Revenue median top-quartile multiple was 25.3X versus May 1, 2024 LTM EV/Revenue median top-quartile multiple of 9.4X).
Median
NTM Rev Multiple
5.6x
Top 10*
NTM Rev Multiple
14.6x
Median
NTM Rev Growth
11%
Top 10*
NTM Rev Growth
21%
Median
Gross Margin
75%
Top 10*
Gross Margin
76%
*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
|
|---|---|---|---|---|---|---|---|---|
| Cloudflare, Inc. | 17.8x | 29,457 | 1,297 | 27.5% | 33% | 77% | -14% | 24% |
| CrowdStrike Holdings, Inc. | 17.1x | 68,108 | 3,056 | 30.0% | 36% | 75% | 0% | 33% |
| Palantir Technologies Inc. | 17.0x | 45,568 | 2,225 | 20.5% | 17% | 81% | 5% | 30% |
| Datadog, Inc. | 15.6x | 40,263 | 2,128 | 21.5% | 27% | 81% | -2% | 28% |
| Samsara Inc. | 15.5x | 18,505 | 937 | 27.5% | 44% | 74% | -27% | 19% |
| Snowflake Inc. | 13.8x | 47,366 | 2,806 | 22.3% | 36% | 68% | -39% | 39% |
| MongoDB, Inc. | 13.3x | 25,809 | 1,683 | 15.3% | 31% | 75% | -14% | 14% |
| The Descartes Systems Group Inc. | 12.0x | 7,616 | 573 | 10.5% | 18% | 76% | 29% | 35% |
| ServiceNow, Inc. | 11.9x | 135,894 | 9,478 | 20.5% | 24% | 79% | 10% | 36% |
| Manhattan Associates, Inc. | 11.9x | 12,531 | 962 | 9.7% | 19% | 54% | 23% | 23% |
| HubSpot, Inc. | 11.8x | 30,195 | 2,170 | 18.2% | 25% | 84% | -5% | 18% |
| Microsoft Corporation | 10.8x | 2,919,836 | 236,584 | 13.9% | 14% | 70% | 45% | 27% |
| Zscaler, Inc. | 10.4x | 24,695 | 1,896 | 24.8% | 41% | 78% | -10% | 32% |
| Shopify Inc. | 10.1x | 86,510 | 7,060 | 21.2% | 26% | 50% | 4% | 8% |
| GitLab Inc. | 10.0x | 7,349 | 580 | 26.6% | 37% | 90% | -31% | 68% |
| SPS Commerce, Inc. | 9.6x | 6,161 | 561 | 14.8% | 19% | 66% | 14% | 23% |
| Adobe Inc. | 9.3x | 204,614 | 19,936 | 10.5% | 11% | 88% | 35% | 34% |
| Qualys, Inc. | 9.2x | 5,603 | 554 | 9.6% | 13% | 81% | 29% | 37% |
| Atlassian Corporation | 9.0x | 43,956 | 4,166 | 17.2% | 24% | 82% | 0% | 32% |
| JFrog Ltd. | 8.9x | 3,798 | 350 | 22.0% | 25% | 78% | -19% | 30% |
| monday.com Ltd. | 8.8x | 8,208 | 730 | 28.3% | 41% | 89% | -5% | 24% |
| Confluent, Inc. | 8.6x | 8,136 | 777 | 22.3% | 33% | 71% | -54% | 14% |
| HashiCorp, Inc. | 8.1x | 5,256 | 583 | 10.7% | 23% | 81% | -42% | 6% |
| Dynatrace, Inc. | 7.9x | 12,703 | 1,364 | 18.1% | 24% | 83% | 9% | 24% |
| Clearwater Analytics Holdings, Inc. | 7.5x | 3,274 | 368 | 18.0% | 21% | 71% | 0% | 29% |
| Workday, Inc. | 7.2x | 60,408 | 7,259 | 15.8% | 17% | 76% | 3% | 29% |
| Elastic N.V. | 7.0x | 9,886 | 1,212 | 17.1% | 18% | 74% | -10% | 24% |
| Oracle Corporation | 6.9x | 391,278 | 52,510 | 7.5% | 9% | 72% | 29% | 27% |
| SentinelOne, Inc. | 6.9x | 5,647 | 621 | 31.6% | 47% | 71% | -60% | 14% |
| DoubleVerify Holdings, Inc. | 6.9x | 4,807 | 573 | 21.6% | 27% | 81% | 15% | 18% |
| Salesforce, Inc. | 6.8x | 260,240 | 34,857 | 9.1% | 11% | 76% | 17% | 33% |
| Braze, Inc. | 6.7x | 3,840 | 472 | 21.7% | 33% | 69% | -31% | 16% |
| Sprout Social, Inc. | 6.7x | 2,828 | 334 | 27.6% | 31% | 77% | -19% | 21% |
| Informatica Inc. | 6.0x | 10,174 | 1,595 | 6.4% | 6% | 80% | 6% | 28% |
| Workiva Inc. | 6.0x | 4,297 | 630 | 14.4% | 17% | 76% | -11% | 19% |
| BlackLine, Inc. | 5.9x | 3,823 | 590 | 9.3% | 13% | 75% | -1% | 16% |
| Dayforce Inc. | 5.9x | 10,220 | 1,514 | 14.1% | 21% | 48% | 9% | 8% |
| Freshworks Inc. | 5.9x | 4,175 | 596 | 18.8% | 20% | 83% | -29% | 26% |
| Tenable Holdings, Inc. | 5.9x | 5,282 | 799 | 12.9% | 17% | 77% | -5% | 23% |
| Klaviyo, Inc. | 5.9x | 5,231 | 698 | 27.9% | 48% | 75% | -46% | 34% |
| Okta, Inc. | 5.9x | 14,660 | 2,263 | 10.8% | 22% | 74% | -20% | 33% |
| Docebo Inc. | 5.8x | 1,293 | 181 | 22.6% | 27% | 81% | 3% | 11% |
| C3.ai, Inc. | 5.8x | 2,033 | 296 | 18.3% | 11% | 59% | -104% | -17% |
| Paylocity Holding Corporation | 5.7x | 8,433 | 1,292 | 13.8% | 29% | 69% | 17% | 20% |
| Constellation Software Inc. | 5.6x | 57,021 | 8,407 | 20.3% | 27% | 35% | 14% | 32% |
| Paycom Software, Inc. | 5.6x | 10,526 | 1,694 | 10.5% | 23% | 87% | 27% | 19% |
| DigitalOcean Holdings, Inc. | 5.5x | 4,245 | 693 | 10.7% | 20% | 59% | 10% | 16% |
| ZoomInfo Technologies Inc. | 5.3x | 6,772 | 1,240 | 2.6% | 13% | 89% | 22% | 38% |
| Couchbase, Inc. | 5.2x | 1,064 | 180 | 14.2% | 16% | 88% | -44% | 11% |
| PROS Holdings, Inc. | 5.1x | 1,694 | 304 | 10.0% | 10% | 62% | -17% | 11% |
| Q2 Holdings, Inc. | 4.8x | 3,311 | 625 | 9.8% | 10% | 49% | -14% | 15% |
| VTEX | 4.8x | 1,166 | 202 | 19.8% | 28% | 70% | -7% | 12% |
| AvidXchange Holdings, Inc. | 4.7x | 2,099 | 381 | 17.6% | 20% | 68% | -14% | 2% |
| Appian Corporation | 4.6x | 2,823 | 545 | 12.9% | 17% | 74% | -19% | -2% |
| BILL Holdings, Inc. | 4.5x | 5,915 | 1,192 | 9.6% | 39% | 86% | -16% | 11% |
| Paycor HCM, Inc. | 4.4x | 3,045 | 605 | 15.9% | 25% | 66% | -15% | 21% |
| Asana, Inc. | 4.3x | 3,101 | 653 | 10.7% | 19% | 90% | -41% | 12% |
| Jamf Holding Corp. | 4.3x | 2,644 | 561 | 10.1% | 17% | 80% | -19% | 24% |
| Smartsheet Inc. | 4.1x | 4,620 | 958 | 16.5% | 25% | 81% | -13% | 28% |
| Five9, Inc. | 4.1x | 4,315 | 910 | 15.9% | 17% | 53% | -10% | 23% |
| Box, Inc. | 3.9x | 4,259 | 1,038 | 4.4% | 5% | 75% | 5% | 28% |
| Progress Software Corporation | 3.7x | 2,732 | 715 | 2.5% | 15% | 86% | 18% | 30% |
| PagerDuty, Inc. | 3.7x | 1,748 | 431 | 10.3% | 16% | 82% | -22% | 24% |
| DocuSign, Inc. | 3.7x | 10,686 | 2,762 | 5.9% | 10% | 80% | 2% | 40% |
| SolarWinds Corporation | 3.6x | 2,832 | 759 | 3.2% | 5% | 90% | 22% | 37% |
| Dropbox, Inc. | 3.3x | 8,512 | 2,502 | 1.8% | 8% | 81% | 15% | 30% |
| Pegasystems Inc. | 3.3x | 5,011 | 1,437 | 5.6% | 13% | 74% | 9% | 28% |
| Sprinklr, Inc. | 3.2x | 2,564 | 732 | 9.9% | 18% | 76% | 5% | 9% |
| International Business Machines Corporation | 3.1x | 196,500 | 62,069 | 2.1% | 2% | 56% | 16% | 19% |
| EverCommerce Inc. | 3.1x | 2,120 | 675 | 1.4% | 9% | 66% | 1% | 18% |
| Amplitude, Inc. | 3.0x | 878 | 276 | 6.1% | 16% | 74% | -34% | 18% |
| Open Text Corporation | 3.0x | 17,306 | 5,696 | 2.3% | 61% | 77% | 15% | 7% |
| Zuora, Inc. | 2.9x | 1,328 | 432 | 5.2% | 9% | 68% | -13% | 7% |
| Enghouse Systems Limited | 2.9x | 1,029 | 350 | 2.1% | 11% | 67% | 18% | 26% |
| Zoom Video Communications, Inc. | 2.6x | 11,902 | 4,527 | 2.0% | 3% | 76% | 13% | 33% |
| American Software, Inc. | 2.5x | 258 | 119 | -13.0% | 3% | 59% | 6% | 14% |
| RingCentral, Inc. | 1.8x | 4,308 | 2,202 | 8.2% | 11% | 70% | -8% | 21% |
| Twilio Inc. | 1.7x | 7,622 | 4,154 | 5.3% | 9% | 49% | -9% | 15% |
| BigCommerce Holdings, Inc. | 1.6x | 515 | 309 | 7.1% | 11% | 76% | -18% | 2% |
| Upland Software, Inc. | 1.6x | 422 | 298 | -8.4% | -6% | 68% | -11% | 26% |
| WalkMe Ltd. | 1.5x | 417 | 267 | 5.2% | 9% | 83% | -24% | 5% |
| Yext, Inc. | 1.5x | 588 | 404 | -1.0% | 1% | 78% | -2% | 12% |
| Veritone, Inc. | 1.4x | 187 | 128 | 5.1% | -15% | 78% | -61% | -28% |
| Asure Software, Inc. | 1.4x | 171 | 119 | 3.9% | 24% | 71% | -3% | 7% |
| Riskified Ltd. | 1.4x | 456 | 298 | 10.6% | 14% | 51% | -26% | 7% |
| Rackspace Technology, Inc. | 1.3x | 3,612 | 2,957 | -7.1% | -5% | 22% | -2% | 21% |
| eGain Corporation | 1.2x | 109 | 96 | -4.5% | -2% | 71% | 6% | 12% |
| Domo, Inc. | 1.1x | 359 | 319 | 0.1% | 3% | 76% | -17% | 13% |
| Kaltura, Inc. | 0.9x | 160 | 175 | 0.0% | 4% | 64% | -22% | 11% |
| Expensify, Inc. | 0.9x | 120 | 151 | -6.2% | -11% | 56% | -22% | 8% |
| ON24, Inc. | 0.6x | 82 | 164 | -11.4% | -14% | 73% | -33% | 15% |
| Top 10 Average | 14.6x | 43,112 | 2,515 | 20.5% | 28% | 74% | -3% | 28% |
| Top 10 Median | 14.6x | 34,860 | 1,906 | 21.0% | 29% | 76% | -1% | 29% |
| Overall Average | 6.1x | 55,089 | 5,789 | 11.7% | 18% | 73% | -7% | 20% |
| Overall Median | 5.6x | 4,807 | 715 | 10.7% | 17% | 75% | -5% | 21% |
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%)
9.4x
|
|
Multiple
|
Growth
|
|---|---|---|
| SentinelOne, Inc. | 6.9x | 31.6% |
| CrowdStrike Holdings, Inc. | 17.1x | 30.0% |
| monday.com Ltd. | 8.8x | 28.3% |
| Klaviyo, Inc. | 5.9x | 27.9% |
| Sprout Social, Inc. | 6.7x | 27.6% |
| Samsara Inc. | 15.5x | 27.5% |
| Cloudflare, Inc. | 17.8x | 27.5% |
| GitLab Inc. | 10.0x | 26.6% |
EV/NTM Revenue Multiple
Average Growth (15%-25%)
7.4x
|
|
Multiple
|
Growth
|
|---|---|---|
| Zscaler, Inc. | 10.4x | 24.8% |
| Docebo Inc. | 5.8x | 22.6% |
| Snowflake Inc. | 13.8x | 22.3% |
| Confluent, Inc. | 8.6x | 22.3% |
| JFrog Ltd. | 8.9x | 22.0% |
| Braze, Inc. | 6.7x | 21.7% |
| DoubleVerify Holdings, Inc. | 6.9x | 21.6% |
| Datadog, Inc. | 15.6x | 21.5% |
| Shopify Inc. | 10.1x | 21.2% |
| ServiceNow, Inc. | 11.9x | 20.5% |
| Palantir Technologies Inc. | 17.0x | 20.5% |
| Constellation Software Inc. | 5.6x | 20.3% |
| VTEX | 4.8x | 19.8% |
| Freshworks Inc. | 5.9x | 18.8% |
| C3.ai, Inc. | 5.8x | 18.3% |
| HubSpot, Inc. | 11.8x | 18.2% |
| Dynatrace, Inc. | 7.9x | 18.1% |
| Clearwater Analytics Holdings, Inc. | 7.5x | 18.0% |
| AvidXchange Holdings, Inc. | 4.7x | 17.6% |
| Atlassian Corporation | 9.0x | 17.2% |
| Elastic N.V. | 7.0x | 17.1% |
| Smartsheet Inc. | 4.1x | 16.5% |
| Five9, Inc. | 4.1x | 15.9% |
| Paycor HCM, Inc. | 4.4x | 15.9% |
| Workday, Inc. | 7.2x | 15.8% |
| MongoDB, Inc. | 13.3x | 15.3% |
EV/NTM Revenue Multiple
Low Growth (< 15%)
3.7x
|
|
Multiple
|
Growth
|
|---|---|---|
| SPS Commerce, Inc. | 9.6x | 14.8% |
| Workiva Inc. | 6.0x | 14.4% |
| Couchbase, Inc. | 5.2x | 14.2% |
| Dayforce Inc. | 5.9x | 14.1% |
| Microsoft Corporation | 10.8x | 13.9% |
| Paylocity Holding Corporation | 5.7x | 13.8% |
| Tenable Holdings, Inc. | 5.9x | 12.9% |
| Appian Corporation | 4.6x | 12.9% |
| Okta, Inc. | 5.9x | 10.8% |
| DigitalOcean Holdings, Inc. | 5.5x | 10.7% |
| HashiCorp, Inc. | 8.1x | 10.7% |
| Asana, Inc. | 4.3x | 10.7% |
| Riskified Ltd. | 1.4x | 10.6% |
| Adobe Inc. | 9.3x | 10.5% |
| Paycom Software, Inc. | 5.6x | 10.5% |
| The Descartes Systems Group Inc. | 12.0x | 10.5% |
| PagerDuty, Inc. | 3.7x | 10.3% |
| Jamf Holding Corp. | 4.3x | 10.1% |
| PROS Holdings, Inc. | 5.1x | 10.0% |
| Sprinklr, Inc. | 3.2x | 9.9% |
| Q2 Holdings, Inc. | 4.8x | 9.8% |
| Manhattan Associates, Inc. | 11.9x | 9.7% |
| BILL Holdings, Inc. | 4.5x | 9.6% |
| Qualys, Inc. | 9.2x | 9.6% |
| BlackLine, Inc. | 5.9x | 9.3% |
| Salesforce, Inc. | 6.8x | 9.1% |
| RingCentral, Inc. | 1.8x | 8.2% |
| Oracle Corporation | 6.9x | 7.5% |
| BigCommerce Holdings, Inc. | 1.6x | 7.1% |
| Informatica Inc. | 6.0x | 6.4% |
| Amplitude, Inc. | 3.0x | 6.1% |
| DocuSign, Inc. | 3.7x | 5.9% |
| Pegasystems Inc. | 3.3x | 5.6% |
| Twilio Inc. | 1.7x | 5.3% |
| WalkMe Ltd. | 1.5x | 5.2% |
| Zuora, Inc. | 2.9x | 5.2% |
| Veritone, Inc. | 1.4x | 5.1% |
| Box, Inc. | 3.9x | 4.4% |
| Asure Software, Inc. | 1.4x | 3.9% |
| SolarWinds Corporation | 3.6x | 3.2% |
| ZoomInfo Technologies Inc. | 5.3x | 2.6% |
| Progress Software Corporation | 3.7x | 2.5% |
| Open Text Corporation | 3.0x | 2.3% |
| International Business Machines Corporation | 3.1x | 2.1% |
| Enghouse Systems Limited | 2.9x | 2.1% |
| Zoom Video Communications, Inc. | 2.6x | 2.0% |
| Dropbox, Inc. | 3.3x | 1.8% |
| EverCommerce Inc. | 3.1x | 1.4% |
| Domo, Inc. | 1.1x | 0.1% |
| Kaltura, Inc. | 0.9x | 0.0% |
| Yext, Inc. | 1.5x | -1.0% |
| eGain Corporation | 1.2x | -4.5% |
| Expensify, Inc. | 0.9x | -6.2% |
| Rackspace Technology, Inc. | 1.3x | -7.1% |
| Upland Software, Inc. | 1.6x | -8.4% |
| ON24, Inc. | 0.6x | -11.4% |
| American Software, Inc. | 2.5x | -13.0% |
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$12.1B
- Series B$27.5B
- Series C$31.5B
- Series D$2,062.5B
Average
Pre Money Valuation
- Series A$68.7B
- Series B$183.7B
- Series C$154.8B
- Series D$7,637.5B
Average
Post Money Valuation
- Series A$83.0B
- Series B$213.7B
- Series C$186.3B
- Series D$9,700.0B
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.