Software Index
State of the Market
The past is prologue. The trade war is on. The future is…?
Markets usually set their eyes on the recent past — quarterly earnings, deal volume, price trends, etc. But a fundamental readjustment is underway as we attempt to discern just where to look in a more distant history. Which past can help guide us in the present? What past events mirror our present circumstances? Which historical patterns might predict our future?
These questions are top-of-mind for investment professionals around the globe as they consider the facts of the present: Trade ties are being fundamentally shifted, USA uni-polar dominance is threatened by the rise of China, semiconductors and data have become the currency of AI, post-WWII alliances are evolving, and tariffs are being used to leverage the influence still retained by the 20th century’s great financial power.
This unique combination of facts has no direct historical parallel. Yet in markets, where we must value future outcomes based on present information, we seek coherent answers to these complex questions. History doesn’t repeat, but it does rhyme. We just need to discern if it will rhyme with “regression” or with “health”.
Through April 2, market signals were leaning positive. Q1 deal volume reached its highest level since 2022, non-farm payrolls increased by 228,000 (exceeding expectations), and March CPI decreased 0.1% (also better than expected).
However, new tariff announcements overshadowed these positive trends. Both equity and debt markets responded with selling pressure, and bond market concerns intensified as long-term yields rose. Relief came when the administration announced a 90-day pause on severe tariffs, along with exemptions for critical goods and openness to negotiations during this period.
China remains the notable exception, where trade tensions have escalated dramatically with the USA. Both nations have engaged in retaliatory measures, pushing tariffs above 100% on numerous goods.
The formation of the 21st century trade regime may be upon us and we are all looking for the clues to the conclusion. Will protectionist tariffs become standard, or will negotiations forge a more open trading system adapted to an era of Great Power competition? Only time will tell.
Median
NTM Rev Multiple
4.8x
Top 5*
NTM Rev Multiple
11.8x
Median
NTM Rev Growth
10%
Top 5*
NTM Rev Growth
22%
Median
Gross Margin
75%
Top 5*
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 5 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. | 51.2x | 193,048 | 2,866 | 31.7% | 29% | 80% | 11% | 32% |
| Cloudflare, Inc. | 18.4x | 38,469 | 1,670 | 25.6% | 29% | 77% | -8% | 21% |
| CrowdStrike Holdings, Inc. | 17.5x | 83,900 | 3,954 | 21.1% | 29% | 75% | -1% | 33% |
| Samsara Inc. | 13.7x | 20,925 | 1,249 | 22.7% | 33% | 76% | -15% | 18% |
| ServiceNow, Inc. | 12.0x | 156,410 | 10,984 | 18.8% | 22% | 79% | 13% | 30% |
| The Descartes Systems Group Inc. | 11.7x | 8,398 | 651 | 10.6% | 14% | 76% | 29% | 31% |
| Clearwater Analytics Holdings, Inc. | 11.5x | 6,233 | 452 | 19.5% | 23% | 73% | 5% | 25% |
| Shopify Inc. | 10.9x | 119,241 | 8,880 | 23.1% | 26% | 50% | 14% | 10% |
| Snowflake Inc. | 10.3x | 46,166 | 3,626 | 23.7% | 29% | 67% | -40% | 36% |
| Zscaler, Inc. | 10.0x | 29,059 | 2,422 | 19.7% | 28% | 78% | -4% | 33% |
| Datadog, Inc. | 9.9x | 31,659 | 2,684 | 19.3% | 26% | 81% | 2% | 26% |
| Manhattan Associates, Inc. | 9.7x | 10,362 | 1,042 | 2.2% | 12% | 55% | 25% | 25% |
| Microsoft Corporation | 9.6x | 2,821,997 | 261,802 | 12.0% | 15% | 69% | 45% | 20% |
| Atlassian Corporation | 9.6x | 54,374 | 4,795 | 18.2% | 23% | 82% | -3% | 33% |
| HubSpot, Inc. | 9.5x | 28,470 | 2,628 | 14.3% | 21% | 85% | -2% | 20% |
| ServiceTitan, Inc. | 9.2x | 8,288 | 772 | 16.8% | 26% | 66% | -24% | 15% |
| monday.com Ltd. | 9.0x | 10,990 | 972 | 25.3% | 33% | 89% | -2% | 27% |
| Oracle Corporation | 7.7x | 483,944 | 55,783 | 12.6% | 6% | 71% | 31% | 13% |
| Waystar Holding Corp. | 7.4x | 7,512 | 944 | 7.1% | 19% | 67% | 15% | 30% |
| GitLab Inc. | 7.2x | 6,761 | 759 | 24.4% | 31% | 89% | -18% | -10% |
| Dynatrace, Inc. | 7.1x | 13,182 | 1,634 | 14.2% | 20% | 82% | 10% | 26% |
| Adobe Inc. | 6.8x | 162,587 | 22,037 | 9.0% | 11% | 89% | 37% | 39% |
| Klaviyo, Inc. | 6.4x | 7,436 | 937 | 23.9% | 34% | 76% | -9% | 20% |
| Q2 Holdings, Inc. | 6.4x | 4,953 | 696 | 11.4% | 12% | 51% | -6% | 20% |
| Paylocity Holding Corporation | 6.4x | 10,370 | 1,499 | 8.8% | 16% | 69% | 18% | 19% |
| SPS Commerce, Inc. | 6.3x | 4,825 | 638 | 19.4% | 19% | 67% | 14% | 21% |
| Salesforce, Inc. | 6.3x | 255,932 | 37,895 | 7.8% | 9% | 77% | 20% | 38% |
| Qualys, Inc. | 6.2x | 4,066 | 608 | 7.2% | 10% | 82% | 31% | 35% |
| JFrog Ltd. | 6.2x | 3,104 | 428 | 17.1% | 22% | 77% | -20% | 29% |
| Workday, Inc. | 6.1x | 57,546 | 8,446 | 12.7% | 16% | 76% | 6% | 26% |
| Confluent, Inc. | 6.0x | 7,029 | 964 | 20.8% | 24% | 73% | -43% | 21% |
| Paycom Software, Inc. | 5.9x | 11,913 | 1,883 | 7.7% | 11% | 86% | 27% | 13% |
| Constellation Software Inc. | 5.9x | 70,227 | 10,066 | 19.3% | 20% | 36% | 15% | 15% |
| Okta, Inc. | 5.8x | 16,730 | 2,610 | 9.7% | 15% | 76% | -2% | 31% |
| OneStream, Inc. | 5.7x | 3,309 | 489 | 19.6% | 31% | 63% | -65% | 39% |
| Elastic N.V. | 5.3x | 8,607 | 1,430 | 13.7% | 18% | 74% | -6% | 25% |
| MongoDB, Inc. | 5.3x | 11,978 | 2,006 | 13.7% | 19% | 73% | -11% | 12% |
| SentinelOne, Inc. | 5.2x | 5,290 | 821 | 23.1% | 32% | 74% | -40% | 23% |
| Paycor HCM, Inc. | 5.2x | 3,977 | 700 | 9.5% | 16% | 66% | -3% | 23% |
| Dayforce Inc. | 5.1x | 9,885 | 1,760 | 10.1% | 16% | 51% | 6% | 16% |
| SolarWinds Corporation | 5.1x | 4,159 | 797 | 2.7% | 5% | 90% | 27% | 33% |
| DocuSign, Inc. | 5.0x | 15,641 | 2,977 | 5.6% | 8% | 79% | 8% | 39% |
| DigitalOcean Holdings, Inc. | 4.9x | 4,342 | 781 | 13.2% | 13% | 60% | 13% | 14% |
| Workiva Inc. | 4.9x | 4,237 | 739 | 17.3% | 17% | 77% | -10% | 19% |
| Braze, Inc. | 4.8x | 3,324 | 593 | 16.4% | 26% | 69% | -21% | 16% |
| C3.ai, Inc. | 4.6x | 2,074 | 367 | 21.8% | 24% | 60% | -87% | 17% |
| BlackLine, Inc. | 4.4x | 3,109 | 653 | 7.4% | 11% | 75% | 3% | 22% |
| Box, Inc. | 4.3x | 4,955 | 1,090 | 6.1% | 5% | 79% | 7% | 29% |
| International Business Machines Corporation | 4.2x | 274,465 | 62,753 | 3.6% | 1% | 57% | 11% | 13% |
| Tenable Holdings, Inc. | 4.1x | 4,053 | 900 | 8.9% | 13% | 78% | 0% | 24% |
| Asana, Inc. | 4.1x | 3,197 | 724 | 8.7% | 11% | 89% | -35% | 18% |
| Freshworks Inc. | 4.0x | 3,223 | 720 | 13.2% | 21% | 84% | -18% | 30% |
| ZoomInfo Technologies Inc. | 3.9x | 4,653 | 1,214 | -1.5% | -2% | 88% | 16% | 32% |
| Dropbox, Inc. | 3.8x | 9,462 | 2,548 | -2.9% | 2% | 83% | 21% | 32% |
| Logility Supply Chain Solutions, Inc. | 3.8x | 401 | 102 | 3.5% | -2% | 66% | 3% | 21% |
| Progress Software Corporation | 3.7x | 3,623 | 807 | 21.0% | 13% | 86% | 20% | 40% |
| Pegasystems Inc. | 3.6x | 5,781 | 1,497 | 6.4% | 5% | 74% | 11% | 25% |
| EverCommerce Inc. | 3.5x | 2,259 | 699 | -8.3% | 3% | 67% | 6% | 17% |
| Informatica Inc. | 3.5x | 5,909 | 1,640 | 3.2% | 3% | 80% | 9% | 32% |
| Appian Corporation | 3.4x | 2,288 | 617 | 10.5% | 13% | 76% | -9% | 6% |
| Docebo Inc. | 3.2x | 781 | 217 | 11.4% | 20% | 81% | 9% | 20% |
| PagerDuty, Inc. | 3.1x | 1,575 | 467 | 7.7% | 9% | 83% | -13% | 31% |
| Amplitude, Inc. | 3.1x | 1,026 | 299 | 9.9% | 8% | 74% | -36% | 13% |
| AvidXchange Holdings, Inc. | 3.1x | 1,420 | 439 | 4.3% | 15% | 72% | -1% | 9% |
| Zoom Communications Inc. | 3.1x | 14,790 | 4,665 | 2.8% | 3% | 76% | 17% | 41% |
| Couchbase, Inc. | 3.0x | 693 | 209 | 9.9% | 16% | 88% | -38% | 17% |
| VTEX | 2.9x | 718 | 227 | 8.7% | 13% | 74% | 4% | 7% |
| PROS Holdings, Inc. | 2.9x | 1,044 | 330 | 9.2% | 9% | 66% | -6% | 11% |
| Twilio Inc. | 2.8x | 13,670 | 4,458 | 8.0% | 7% | 51% | -1% | 17% |
| DoubleVerify Holdings, Inc. | 2.8x | 2,001 | 657 | 10.4% | 15% | 82% | 13% | 23% |
| BILL Holdings, Inc. | 2.7x | 4,243 | 1,388 | 12.1% | 16% | 85% | -6% | 10% |
| Sprout Social, Inc. | 2.7x | 1,223 | 406 | 10.9% | 22% | 77% | -14% | 23% |
| Jamf Holding Corp. | 2.6x | 1,737 | 627 | 8.1% | 12% | 80% | -9% | 14% |
| Open Text Corporation | 2.3x | 12,104 | 5,413 | -3.3% | -5% | 76% | 19% | 53% |
| Enghouse Systems Limited | 2.2x | 804 | 350 | 4.1% | 8% | 65% | 19% | 25% |
| Sprinklr, Inc. | 2.1x | 1,702 | 796 | 3.3% | 9% | 72% | 3% | 7% |
| Five9, Inc. | 2.0x | 2,285 | 1,042 | 9.8% | 14% | 54% | -3% | 20% |
| Asure Software, Inc. | 1.9x | 254 | 120 | 12.9% | 1% | 69% | -9% | -4% |
| Upland Software, Inc. | 1.8x | 439 | 275 | -12.4% | -8% | 70% | -5% | 24% |
| Yext, Inc. | 1.7x | 751 | 421 | 6.0% | 4% | 77% | -1% | 33% |
| Expensify, Inc. | 1.6x | 236 | 139 | 6.9% | -8% | 54% | -1% | 19% |
| RingCentral, Inc. | 1.5x | 3,782 | 2,400 | 5.1% | 9% | 71% | 1% | 25% |
| BigCommerce Holdings, Inc. | 1.4x | 495 | 333 | 3.9% | 8% | 77% | -8% | 14% |
| Kaltura, Inc. | 1.4x | 255 | 179 | 1.3% | 2% | 67% | -13% | 16% |
| Rackspace Technology, Inc. | 1.3x | 3,559 | 2,737 | -1.9% | -7% | 20% | -4% | 10% |
| Domo, Inc. | 1.2x | 389 | 317 | -0.8% | -1% | 74% | -19% | 17% |
| Riskified Ltd. | 1.2x | 398 | 328 | 3.9% | 10% | 52% | -15% | 14% |
| eGain Corporation | 0.8x | 70 | 89 | 4.2% | -7% | 70% | 4% | 2% |
| ON24, Inc. | 0.3x | 41 | 148 | -5.6% | -10% | 75% | -32% | 23% |
| Top 10 Average | 16.7x | 70,185 | 3,675 | 21.6% | 26% | 73% | 0% | 27% |
| Top 10 Median | 11.8x | 42,318 | 2,644 | 21.9% | 28% | 76% | 2% | 30% |
| Overall Average | 5.9x | 59,245 | 6,496 | 10.7% | 14% | 73% | -1% | 22% |
| Overall Median | 4.8x | 4,825 | 821 | 9.9% | 13% | 75% | -1% | 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 (> 15%)
9.0x
|
|
Multiple
|
Growth
|
|---|---|---|
| Palantir Technologies Inc. | 51.2x | 31.7% |
| Cloudflare, Inc. | 18.4x | 25.6% |
| monday.com Ltd. | 9.0x | 25.3% |
| GitLab Inc. | 7.2x | 24.4% |
| Klaviyo, Inc. | 6.4x | 23.9% |
| Snowflake Inc. | 10.3x | 23.7% |
| Shopify Inc. | 10.9x | 23.1% |
| SentinelOne, Inc. | 5.2x | 23.1% |
| Samsara Inc. | 13.7x | 22.7% |
| C3.ai, Inc. | 4.6x | 21.8% |
| CrowdStrike Holdings, Inc. | 17.5x | 21.1% |
| Progress Software Corporation | 3.7x | 21.0% |
| Confluent, Inc. | 6.0x | 20.8% |
| Zscaler, Inc. | 10.0x | 19.7% |
| OneStream, Inc. | 5.7x | 19.6% |
| Clearwater Analytics Holdings, Inc. | 11.5x | 19.5% |
| SPS Commerce, Inc. | 6.3x | 19.4% |
| Constellation Software Inc. | 5.9x | 19.3% |
| Datadog, Inc. | 9.9x | 19.3% |
| ServiceNow, Inc. | 12.0x | 18.8% |
| Atlassian Corporation | 9.6x | 18.2% |
| Workiva Inc. | 4.9x | 17.3% |
| JFrog Ltd. | 6.2x | 17.1% |
| ServiceTitan, Inc. | 9.2x | 16.8% |
| Braze, Inc. | 4.8x | 16.4% |
EV/NTM Revenue Multiple
Average Growth (5%-15%)
6.0x
|
|
Multiple
|
Growth
|
|---|---|---|
| HubSpot, Inc. | 9.5x | 14.3% |
| Dynatrace, Inc. | 7.1x | 14.2% |
| Elastic N.V. | 5.3x | 13.7% |
| MongoDB, Inc. | 5.3x | 13.7% |
| DigitalOcean Holdings, Inc. | 4.9x | 13.2% |
| Freshworks Inc. | 4.0x | 13.2% |
| Asure Software, Inc. | 1.9x | 12.9% |
| Workday, Inc. | 6.1x | 12.7% |
| Oracle Corporation | 7.7x | 12.6% |
| BILL Holdings, Inc. | 2.7x | 12.1% |
| Microsoft Corporation | 9.6x | 12.0% |
| Docebo Inc. | 3.2x | 11.4% |
| Q2 Holdings, Inc. | 6.4x | 11.4% |
| Sprout Social, Inc. | 2.7x | 10.9% |
| The Descartes Systems Group Inc. | 11.7x | 10.6% |
| Appian Corporation | 3.4x | 10.5% |
| DoubleVerify Holdings, Inc. | 2.8x | 10.4% |
| Dayforce Inc. | 5.1x | 10.1% |
| Couchbase, Inc. | 3.0x | 9.9% |
| Amplitude, Inc. | 3.1x | 9.9% |
| Five9, Inc. | 2.0x | 9.8% |
| Okta, Inc. | 5.8x | 9.7% |
| Paycor HCM, Inc. | 5.2x | 9.5% |
| PROS Holdings, Inc. | 2.9x | 9.2% |
| Adobe Inc. | 6.8x | 9.0% |
| Tenable Holdings, Inc. | 4.1x | 8.9% |
| Paylocity Holding Corporation | 6.4x | 8.8% |
| Asana, Inc. | 4.1x | 8.7% |
| VTEX | 2.9x | 8.7% |
| Jamf Holding Corp. | 2.6x | 8.1% |
| Twilio Inc. | 2.8x | 8.0% |
| Salesforce, Inc. | 6.3x | 7.8% |
| PagerDuty, Inc. | 3.1x | 7.7% |
| Paycom Software, Inc. | 5.9x | 7.7% |
| BlackLine, Inc. | 4.4x | 7.4% |
| Qualys, Inc. | 6.2x | 7.2% |
| Waystar Holding Corp. | 7.4x | 7.1% |
| Expensify, Inc. | 1.6x | 6.9% |
| Pegasystems Inc. | 3.6x | 6.4% |
| Box, Inc. | 4.3x | 6.1% |
| Yext, Inc. | 1.7x | 6.0% |
| DocuSign, Inc. | 5.0x | 5.6% |
| RingCentral, Inc. | 1.5x | 5.1% |
EV/NTM Revenue Multiple
Low Growth (< 5%)
3.1x
|
|
Multiple
|
Growth
|
|---|---|---|
| AvidXchange Holdings, Inc. | 3.1x | 4.3% |
| eGain Corporation | 0.8x | 4.2% |
| Enghouse Systems Limited | 2.2x | 4.1% |
| Riskified Ltd. | 1.2x | 3.9% |
| BigCommerce Holdings, Inc. | 1.4x | 3.9% |
| International Business Machines Corporation | 4.2x | 3.6% |
| Logility Supply Chain Solutions, Inc. | 3.8x | 3.5% |
| Sprinklr, Inc. | 2.1x | 3.3% |
| Informatica Inc. | 3.5x | 3.2% |
| Zoom Communications Inc. | 3.1x | 2.8% |
| SolarWinds Corporation | 5.1x | 2.7% |
| Manhattan Associates, Inc. | 9.7x | 2.2% |
| Kaltura, Inc. | 1.4x | 1.3% |
| Domo, Inc. | 1.2x | -0.8% |
| ZoomInfo Technologies Inc. | 3.9x | -1.5% |
| Rackspace Technology, Inc. | 1.3x | -1.9% |
| Dropbox, Inc. | 3.8x | -2.9% |
| Open Text Corporation | 2.3x | -3.3% |
| ON24, Inc. | 0.3x | -5.6% |
| EverCommerce Inc. | 3.5x | -8.3% |
| Upland Software, Inc. | 1.8x | -12.4% |
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 Q4 2024
Median
Net Dollar Retention
108.0%
Median
ARR Growth
14.0%
Median
Payback Period
34 months
Top 5*
Net Dollar Retention
115.5%
Top 5*
ARR Growth
25.2%
Top 5*
Payback Period
27 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$17.5B
- Series B$34.8B
- Series C$145.8B
- Series D$142.4B
Average
Pre Money Valuation
- Series A$34.9B
- Series B$195.0B
- Series C$1,710.2B
- Series D$1,480.4B
Average
Post Money Valuation
- Series A$43.8B
- Series B$227.5B
- Series C$1,879.2B
- Series D$1,607.8B
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.