Software Index
State of the Market
Enterprise software valuations expanded rapidly in November. Buoyed by solid Q3 earnings, resilient economic data, and decreased uncertainty following the US election, the top-10 NTM revenue multiple grew by 12.7% to a near-three-year high of 16.4x, and the median NTM revenue multiple grew 15.9% to 5.5x, which aligns with its historical average.
Private markets should follow suit. Software deal activity had been sluggish in 2024, and depressed post-pandemic valuations led to a rise in down-rounds. But rising valuations and the reopening of the IPO window will fuel VC and PE activity. ServiceTitan popped more than 40% following its IPO on December 12th. Several more promising IPOs (including Canva, Databricks, and Stripe) are slated for 2025-2026.
Employment bounced back in November, with total nonfarm payroll rising by 227,000. The unemployment rate changed little at 4.2% in November compared to 4.1% in October. The Consumer Price Index (annual inflation rate) measured a slight uptick to 2.7%. On December 18th, the Federal Reserve cut the target funds rate by a quarter point to 4.25% to 4.5%, and signaled a slower pace of rate cuts in 2025, forecasting a total cut of 50 basis points for the year. Markets reacted with a sharp downturn but remained near all-time highs. The US continued to defy fears of a recession by reporting gross domestic product (GDP) growth at an annualized 2.8% rate in Q3 2024.
Median
NTM Rev Multiple
5.5x
Top 10*
NTM Rev Multiple
16.4x
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
|
|---|---|---|---|---|---|---|---|---|
| Palantir Technologies Inc. | 45.0x | 148,593 | 2,646 | 24.7% | 25% | 81% | 14% | 30% |
| Samsara Inc. | 21.2x | 28,967 | 1,095 | 25.1% | 40% | 75% | -21% | 17% |
| CrowdStrike Holdings, Inc. | 18.1x | 81,786 | 3,740 | 20.7% | 31% | 75% | 0% | 33% |
| Cloudflare, Inc. | 17.3x | 33,888 | 1,572 | 24.9% | 30% | 78% | -9% | 23% |
| ServiceNow, Inc. | 16.6x | 209,638 | 10,464 | 20.5% | 23% | 79% | 12% | 33% |
| Datadog, Inc. | 16.2x | 49,663 | 2,536 | 21.1% | 26% | 81% | 3% | 26% |
| Manhattan Associates, Inc. | 15.6x | 17,268 | 1,025 | 8.0% | 15% | 55% | 25% | 25% |
| The Descartes Systems Group Inc. | 14.4x | 9,829 | 608 | 12.0% | 15% | 76% | 29% | 29% |
| Shopify Inc. | 14.3x | 145,613 | 8,212 | 24.2% | 23% | 51% | 13% | 9% |
| Clearwater Analytics Holdings, Inc. | 13.6x | 6,914 | 424 | 19.9% | 21% | 72% | 7% | 34% |
| Snowflake Inc. | 13.2x | 55,252 | 3,414 | 22.4% | 30% | 67% | -39% | 37% |
| Atlassian Corporation | 12.7x | 67,673 | 4,569 | 16.6% | 23% | 82% | -3% | 33% |
| HubSpot, Inc. | 12.5x | 36,043 | 2,506 | 15.3% | 22% | 85% | -3% | 19% |
| Zscaler, Inc. | 11.7x | 30,528 | 2,168 | 20.5% | 34% | 78% | -6% | 32% |
| monday.com Ltd. | 11.2x | 12,931 | 907 | 27.3% | 34% | 89% | -4% | 26% |
| GitLab Inc. | 11.1x | 9,189 | 665 | 24.6% | 32% | 89% | -25% | 58% |
| Microsoft Corporation | 11.0x | 3,166,784 | 254,190 | 12.9% | 16% | 69% | 44% | 25% |
| MongoDB, Inc. | 11.0x | 22,782 | 1,820 | 14.2% | 22% | 74% | -16% | 16% |
| SPS Commerce, Inc. | 9.9x | 7,061 | 612 | 16.8% | 19% | 67% | 14% | 20% |
| C3.ai, Inc. | 9.9x | 3,966 | 325 | 23.4% | 19% | 58% | -97% | 1% |
| Oracle Corporation | 9.8x | 586,260 | 53,815 | 10.9% | 6% | 71% | 30% | 23% |
| Adobe Inc. | 9.7x | 225,675 | 20,947 | 10.6% | 11% | 89% | 36% | 32% |
| SentinelOne, Inc. | 8.9x | 8,178 | 724 | 26.5% | 38% | 73% | -44% | 20% |
| Dynatrace, Inc. | 8.9x | 15,847 | 1,563 | 14.5% | 21% | 82% | 10% | 31% |
| Q2 Holdings, Inc. | 8.6x | 6,461 | 676 | 11.2% | 11% | 50% | -9% | 21% |
| Confluent, Inc. | 8.5x | 9,369 | 916 | 20.6% | 25% | 73% | -41% | 20% |
| Klaviyo, Inc. | 8.4x | 9,230 | 869 | 25.8% | 35% | 78% | -10% | 17% |
| Salesforce, Inc. | 8.0x | 315,022 | 36,465 | 8.1% | 10% | 76% | 19% | 35% |
| OneStream, Inc. | 8.0x | 4,446 | 460 | 21.0% | N/A | 64% | -59% | N/A |
| Qualys, Inc. | 8.0x | 5,095 | 593 | 7.9% | 10% | 82% | 30% | 35% |
| HashiCorp, Inc. | 7.9x | 5,512 | 628 | 11.9% | 16% | 82% | -33% | 11% |
| Paylocity Holding Corporation | 7.1x | 11,169 | 1,448 | 8.6% | 17% | 69% | 19% | 21% |
| Dayforce Inc. | 7.0x | 13,358 | 1,695 | 12.5% | 17% | 50% | 6% | 9% |
| Elastic N.V. | 7.0x | 10,735 | 1,376 | 12.3% | 19% | 74% | -8% | 26% |
| Workday, Inc. | 6.8x | 62,179 | 8,157 | 12.8% | 17% | 76% | 5% | 27% |
| Waystar Holding Corp. | 6.6x | 6,452 | 906 | 8.0% | 18% | 67% | 14% | 30% |
| Workiva Inc. | 6.6x | 5,401 | 705 | 16.4% | 16% | 77% | -7% | 19% |
| Constellation Software Inc. | 6.6x | 74,410 | 9,686 | 17.3% | 22% | 36% | 14% | 17% |
| Paycom Software, Inc. | 6.3x | 12,716 | 1,824 | 10.5% | 12% | 86% | 32% | 16% |
| JFrog Ltd. | 6.3x | 3,023 | 410 | 17.3% | 24% | 78% | -19% | 26% |
| Docebo Inc. | 6.0x | 1,428 | 209 | 13.8% | 23% | 81% | 10% | 15% |
| Smartsheet Inc. | 5.9x | 7,122 | 1,042 | 15.1% | 20% | 82% | -7% | 26% |
| BILL Holdings, Inc. | 5.9x | 8,840 | 1,344 | 11.5% | 19% | 85% | -7% | 4% |
| Braze, Inc. | 5.8x | 3,664 | 536 | 18.2% | 31% | 69% | -26% | 16% |
| BlackLine, Inc. | 5.7x | 3,976 | 640 | 8.5% | 11% | 75% | 4% | 21% |
| DigitalOcean Holdings, Inc. | 5.5x | 4,699 | 757 | 12.1% | 12% | 60% | 12% | 8% |
| Pegasystems Inc. | 5.2x | 8,024 | 1,481 | 5.1% | 9% | 74% | 12% | 27% |
| Tenable Holdings, Inc. | 5.1x | 4,905 | 878 | 9.1% | 14% | 78% | -2% | 24% |
| DocuSign, Inc. | 5.1x | 15,370 | 2,858 | 6.0% | 8% | 80% | 5% | 40% |
| Informatica Inc. | 5.0x | 8,728 | 1,657 | 5.5% | 7% | 80% | 8% | 24% |
| Box, Inc. | 4.9x | 5,516 | 1,059 | 5.5% | 4% | 77% | 7% | 31% |
| Freshworks Inc. | 4.8x | 3,819 | 686 | 15.3% | 20% | 84% | -23% | 29% |
| Okta, Inc. | 4.5x | 12,037 | 2,452 | 8.7% | 19% | 76% | -9% | 31% |
| Appian Corporation | 4.4x | 2,934 | 596 | 11.9% | 13% | 75% | -13% | 4% |
| DoubleVerify Holdings, Inc. | 4.4x | 3,171 | 638 | 13.4% | 20% | 82% | 13% | 25% |
| AvidXchange Holdings, Inc. | 4.3x | 2,040 | 428 | 10.4% | 18% | 71% | -2% | 9% |
| Asana, Inc. | 4.3x | 3,247 | 689 | 9.7% | 14% | 90% | -40% | 16% |
| Paycor HCM, Inc. | 4.2x | 3,160 | 679 | 10.0% | 17% | 66% | -7% | 23% |
| ZoomInfo Technologies Inc. | 4.2x | 4,968 | 1,222 | -3.2% | 0% | 88% | 16% | 37% |
| SolarWinds Corporation | 4.1x | 3,337 | 785 | 3.0% | 5% | 90% | 26% | 37% |
| Couchbase, Inc. | 4.1x | 900 | 199 | 11.3% | 21% | 89% | -40% | 13% |
| Sprout Social, Inc. | 4.0x | 1,793 | 392 | 14.2% | 27% | 77% | -17% | 22% |
| Progress Software Corporation | 4.0x | 3,515 | 715 | 23.6% | 6% | 86% | 20% | 34% |
| International Business Machines Corporation | 4.0x | 256,780 | 62,580 | 3.1% | 2% | 57% | 16% | 18% |
| Dropbox, Inc. | 3.8x | 9,699 | 2,540 | 0.3% | 3% | 82% | 18% | 31% |
| EverCommerce Inc. | 3.8x | 2,681 | 693 | 2.6% | 4% | 66% | 4% | 16% |
| Zoom Communications Inc. | 3.7x | 17,709 | 4,628 | 2.7% | 3% | 76% | 17% | 42% |
| PagerDuty, Inc. | 3.7x | 1,849 | 457 | 8.9% | 9% | 83% | -16% | 30% |
| VTEX | 3.6x | 940 | 226 | 15.6% | 21% | 74% | 4% | 10% |
| PROS Holdings, Inc. | 3.6x | 1,255 | 323 | 9.0% | 9% | 64% | -9% | 10% |
| Amplitude, Inc. | 3.2x | 1,005 | 293 | 7.5% | 8% | 74% | -32% | 12% |
| Twilio Inc. | 3.1x | 14,462 | 4,339 | 7.5% | 6% | 51% | -2% | 19% |
| Five9, Inc. | 3.0x | 3,375 | 1,002 | 10.6% | 14% | 54% | -6% | 20% |
| Jamf Holding Corp. | 3.0x | 2,049 | 615 | 11.2% | 14% | 80% | -9% | 18% |
| Zuora, Inc. | 2.9x | 1,388 | 446 | 6.8% | 7% | 70% | -7% | 7% |
| Logility Supply Chain Solutions, Inc. | 2.6x | 270 | 102 | 3.0% | -3% | 66% | 5% | 19% |
| Open Text Corporation | 2.6x | 13,654 | 5,613 | -4.7% | 11% | 77% | 18% | 21% |
| Enghouse Systems Limited | 2.5x | 978 | 362 | 6.5% | 14% | 66% | 19% | 27% |
| Sprinklr, Inc. | 2.1x | 1,671 | 774 | 3.0% | 15% | 74% | 5% | 12% |
| Yext, Inc. | 2.0x | 923 | 396 | 15.1% | -2% | 78% | -3% | 14% |
| Asure Software, Inc. | 2.0x | 262 | 115 | 13.2% | -6% | 69% | -10% | -11% |
| RingCentral, Inc. | 2.0x | 4,977 | 2,357 | 7.3% | 9% | 70% | -2% | 26% |
| BigCommerce Holdings, Inc. | 1.8x | 631 | 330 | 4.4% | 11% | 77% | -10% | 14% |
| Expensify, Inc. | 1.8x | 257 | 137 | 5.5% | -14% | 54% | -5% | 11% |
| Upland Software, Inc. | 1.7x | 462 | 279 | -4.1% | -8% | 70% | -8% | 26% |
| Kaltura, Inc. | 1.7x | 303 | 178 | 1.1% | 2% | 65% | -16% | 19% |
| Domo, Inc. | 1.4x | 439 | 318 | -2.0% | 0% | 75% | -20% | 13% |
| Rackspace Technology, Inc. | 1.4x | 3,793 | 2,771 | -2.2% | -8% | 21% | -4% | 10% |
| Riskified Ltd. | 1.3x | 434 | 318 | 4.7% | 9% | 54% | -16% | 12% |
| eGain Corporation | 0.9x | 88 | 90 | 5.5% | -7% | 70% | 6% | 5% |
| ON24, Inc. | 0.6x | 90 | 151 | -6.9% | -12% | 75% | -32% | 21% |
| Top 10 Average | 19.2x | 73,216 | 3,232 | 20.1% | 25% | 72% | 7% | 26% |
| Top 10 Median | 16.4x | 41,775 | 2,054 | 20.9% | 24% | 76% | 10% | 28% |
| Overall Average | 7.1x | 65,874 | 6,173 | 11.6% | 14% | 73% | -2% | 22% |
| Overall Median | 5.5x | 5,516 | 785 | 11.2% | 15% | 75% | -2% | 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%)
10.1x
|
|
Multiple
|
Growth
|
|---|---|---|
| monday.com Ltd. | 11.2x | 27.3% |
| SentinelOne, Inc. | 8.9x | 26.5% |
| Klaviyo, Inc. | 8.4x | 25.8% |
| Samsara Inc. | 21.2x | 25.1% |
EV/NTM Revenue Multiple
Average Growth (15%-25%)
9.9x
|
|
Multiple
|
Growth
|
|---|---|---|
| Cloudflare, Inc. | 17.3x | 24.9% |
| Palantir Technologies Inc. | 45.0x | 24.7% |
| GitLab Inc. | 11.1x | 24.6% |
| Shopify Inc. | 14.3x | 24.2% |
| Progress Software Corporation | 4.0x | 23.6% |
| C3.ai, Inc. | 9.9x | 23.4% |
| Snowflake Inc. | 13.2x | 22.4% |
| Datadog, Inc. | 16.2x | 21.1% |
| OneStream, Inc. | 8.0x | 21.0% |
| CrowdStrike Holdings, Inc. | 18.1x | 20.7% |
| Confluent, Inc. | 8.5x | 20.6% |
| ServiceNow, Inc. | 16.6x | 20.5% |
| Zscaler, Inc. | 11.7x | 20.5% |
| Clearwater Analytics Holdings, Inc. | 13.6x | 19.9% |
| Braze, Inc. | 5.8x | 18.2% |
| Constellation Software Inc. | 6.6x | 17.3% |
| JFrog Ltd. | 6.3x | 17.3% |
| SPS Commerce, Inc. | 9.9x | 16.8% |
| Atlassian Corporation | 12.7x | 16.6% |
| Workiva Inc. | 6.6x | 16.4% |
| VTEX | 3.6x | 15.6% |
| Freshworks Inc. | 4.8x | 15.3% |
| HubSpot, Inc. | 12.5x | 15.3% |
| Smartsheet Inc. | 5.9x | 15.1% |
| Yext, Inc. | 2.0x | 15.1% |
EV/NTM Revenue Multiple
Low Growth (< 15%)
4.3x
|
|
Multiple
|
Growth
|
|---|---|---|
| Dynatrace, Inc. | 8.9x | 14.5% |
| Sprout Social, Inc. | 4.0x | 14.2% |
| MongoDB, Inc. | 11.0x | 14.2% |
| Docebo Inc. | 6.0x | 13.8% |
| DoubleVerify Holdings, Inc. | 4.4x | 13.4% |
| Asure Software, Inc. | 2.0x | 13.2% |
| Microsoft Corporation | 11.0x | 12.9% |
| Workday, Inc. | 6.8x | 12.8% |
| Dayforce Inc. | 7.0x | 12.5% |
| Elastic N.V. | 7.0x | 12.3% |
| DigitalOcean Holdings, Inc. | 5.5x | 12.1% |
| The Descartes Systems Group Inc. | 14.4x | 12.0% |
| HashiCorp, Inc. | 7.9x | 11.9% |
| Appian Corporation | 4.4x | 11.9% |
| BILL Holdings, Inc. | 5.9x | 11.5% |
| Couchbase, Inc. | 4.1x | 11.3% |
| Jamf Holding Corp. | 3.0x | 11.2% |
| Q2 Holdings, Inc. | 8.6x | 11.2% |
| Oracle Corporation | 9.8x | 10.9% |
| Five9, Inc. | 3.0x | 10.6% |
| Adobe Inc. | 9.7x | 10.6% |
| Paycom Software, Inc. | 6.3x | 10.5% |
| AvidXchange Holdings, Inc. | 4.3x | 10.4% |
| Paycor HCM, Inc. | 4.2x | 10.0% |
| Asana, Inc. | 4.3x | 9.7% |
| Tenable Holdings, Inc. | 5.1x | 9.1% |
| PROS Holdings, Inc. | 3.6x | 9.0% |
| PagerDuty, Inc. | 3.7x | 8.9% |
| Okta, Inc. | 4.5x | 8.7% |
| Paylocity Holding Corporation | 7.1x | 8.6% |
| BlackLine, Inc. | 5.7x | 8.5% |
| Salesforce, Inc. | 8.0x | 8.1% |
| Manhattan Associates, Inc. | 15.6x | 8.0% |
| Waystar Holding Corp. | 6.6x | 8.0% |
| Qualys, Inc. | 8.0x | 7.9% |
| Twilio Inc. | 3.1x | 7.5% |
| Amplitude, Inc. | 3.2x | 7.5% |
| RingCentral, Inc. | 2.0x | 7.3% |
| Zuora, Inc. | 2.9x | 6.8% |
| Enghouse Systems Limited | 2.5x | 6.5% |
| DocuSign, Inc. | 5.1x | 6.0% |
| Box, Inc. | 4.9x | 5.5% |
| eGain Corporation | 0.9x | 5.5% |
| Informatica Inc. | 5.0x | 5.5% |
| Expensify, Inc. | 1.8x | 5.5% |
| Pegasystems Inc. | 5.2x | 5.1% |
| Riskified Ltd. | 1.3x | 4.7% |
| BigCommerce Holdings, Inc. | 1.8x | 4.4% |
| International Business Machines Corporation | 4.0x | 3.1% |
| Sprinklr, Inc. | 2.1x | 3.0% |
| Logility Supply Chain Solutions, Inc. | 2.6x | 3.0% |
| SolarWinds Corporation | 4.1x | 3.0% |
| Zoom Communications Inc. | 3.7x | 2.7% |
| EverCommerce Inc. | 3.8x | 2.6% |
| Kaltura, Inc. | 1.7x | 1.1% |
| Dropbox, Inc. | 3.8x | 0.3% |
| Domo, Inc. | 1.4x | -2.0% |
| Rackspace Technology, Inc. | 1.4x | -2.2% |
| ZoomInfo Technologies Inc. | 4.2x | -3.2% |
| Upland Software, Inc. | 1.7x | -4.1% |
| Open Text Corporation | 2.6x | -4.7% |
| ON24, Inc. | 0.6x | -6.9% |
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.
Enterprise Software Operating Metrics
Last updated Q3 2024
Median
Net Dollar Retention
110.0%
Median
ARR Growth
14.8%
Median
Payback Period
33 months
Top 10*
Net Dollar Retention
114.0%
Top 10*
ARR Growth
26.7%
Top 10*
Payback Period
20 months
*Median multiple, growth rate, and gross margin for the top 10 companies based on EV/NTM Revenue.
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$16.1B
- Series B$35.1B
- Series C$103.6B
- Series D$185.6B
Average
Pre Money Valuation
- Series A$44.1B
- Series B$183.3B
- Series C$1,371.5B
- Series D$3,325.0B
Average
Post Money Valuation
- Series A$54.2B
- Series B$219.6B
- Series C$1,478.3B
- Series D$3,505.6B
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.