Software Index
State of the Market
In July, equity markets demonstrated resilience in the midst of legislative and policy shifts. The Nasdaq closed at a new record on July 15, marking its eighth all-time high of 2025. This surge was driven by tech leaders like Nvidia, fueled by AI momentum. The S&P 500 also set multiple records, supported by solid earnings outlooks and easing inflation in select areas. Bitcoin surpassed $120,000 on July 14, driven by U.S. regulatory hopes during 'Crypto Week'.
The One Big Beautiful Bill was signed on July 4. It delivers permanent tax cuts, Medicaid limits, and federal spending redirects. The bill promises growth through tax relief for businesses and workers, but it could widen deficits and intensify long-term debt concerns.
Trade pressures are building toward an August 1 deadline for tariffs up to 30-40% on imports like drugs, chips, and goods from the EU, Mexico, and China, absent new trade deals. These pressures likely contributed to June’s CPI, which rose 0.3% monthly and 2.7% yearly. That annual rate was above estimates and the highest since February, due primarily to food and housing costs. In contrast, the Producer Price Index (PPI), a measure of wholesale costs, showed no monthly change in June. On an annual basis, PPI inflation slowed to 2.3% from 2.7% in May. This suggests that wholesale price increases are cooling faster than consumer prices, potentially reducing upward pressure on future inflation. At the same time, it highlights the uneven effects of tariffs across different stages of the supply chain.
Expectations for Fed rate cuts are muted for July, with near-zero odds, but they rise to 60% for September. These odds are shaped by inflation expectations and calls for bolder moves. June unemployment fell to 4.1% with 147,000 jobs added, though the pace was slower than in prior months.
In software, an intense AI hiring spree is dominating news as tech giants fiercely compete for high-level talent to build future AI capabilities, with Meta leading by poaching top executives like Apple’s AI models leader and offering packages up to $100-300 million to attract researchers from OpenAI, Google, and others. Google countered with a roughly $2.4 billion move to hire leaders from the AI coding startup Windsurf, underscoring the talent war.
Overall, equity markets and economic indicators reflect cautious optimism amid legislative boosts and recovering growth. However, persistent trade uncertainties and fiscal risks could temper gains, particularly if tariff escalations disrupt supply chains or inflation lingers. The software sector’s AI-driven talent competition signals robust long-term potential but also highlights workforce transitions that may exacerbate near-term volatility. Investors should monitor Fed actions, tariff negotiations, and AI developments closely as these factors converge to shape a potentially dynamic late-summer landscape.
Median
NTM Rev Multiple
4.8x
Top 10*
NTM Rev Multiple
15.1x
Median
NTM Rev Growth
10%
Top 10*
NTM Rev Growth
21%
Median
Gross Margin
75%
Top 10*
Gross Margin
77%
*Median multiple, growth rate, and gross margin for the top 10 companies based on EV/NTM Revenue.
Valuation Trends
Index Leaders
Top 10 companies in the Software Index based on current EV / NTM Revenue Multiple.
|
Company
|
EV/NTM Rev
|
EV ($MM)
|
LTM Rev $MM
|
NTM Rev Growth
|
LTM Rev Growth
|
Gross Margin
|
Operating Margin
|
FCF Margin
|
|---|---|---|---|---|---|---|---|---|
| Palantir Technologies Inc. | 76.4x | 316,612 | 3,115 | 33.1% | 33% | 80% | 13% | 30% |
| Cloudflare, Inc. | 30.4x | 67,438 | 1,770 | 25.4% | 28% | 77% | -9% | 3% |
| CrowdStrike Holdings, Inc. | 24.5x | 123,156 | 4,136 | 21.6% | 26% | 74% | -4% | 32% |
| Zscaler, Inc. | 15.4x | 47,103 | 2,547 | 19.8% | 25% | 77% | -5% | 29% |
| Snowflake Inc. | 15.2x | 72,481 | 3,840 | 24.1% | 27% | 67% | -37% | 30% |
| ServiceNow, Inc. | 15.1x | 204,744 | 11,469 | 18.6% | 21% | 79% | 13% | 33% |
| Samsara Inc. | 13.3x | 21,707 | 1,335 | 22.1% | 32% | 77% | -11% | 18% |
| Datadog, Inc. | 13.0x | 43,819 | 2,835 | 18.9% | 26% | 80% | 1% | 28% |
| Shopify Inc. | 12.7x | 144,383 | 9,379 | 20.9% | 27% | 50% | 15% | 9% |
| Microsoft Corporation | 12.2x | 3,722,423 | 270,010 | 13.2% | 14% | 69% | 45% | 21% |
| The Descartes Systems Group Inc. | 11.6x | 8,530 | 668 | 9.7% | 14% | 76% | 29% | 28% |
| monday.com Ltd. | 11.4x | 14,703 | 1,037 | 24.4% | 32% | 89% | -1% | 27% |
| Manhattan Associates, Inc. | 11.0x | 11,831 | 1,051 | 2.2% | 9% | 56% | 26% | 28% |
| Oracle Corporation | 10.7x | 712,362 | 57,399 | 16.2% | 8% | 71% | 31% | 5% |
| ServiceTitan, Inc. | 10.0x | 9,459 | 817 | 15.9% | 28% | 66% | -29% | N/A |
| HubSpot, Inc. | 8.9x | 27,968 | 2,724 | 15.9% | 19% | 85% | -2% | 21% |
| Atlassian Corporation | 8.8x | 51,568 | 4,963 | 18.8% | 19% | 82% | -3% | 36% |
| JFrog Ltd. | 8.6x | 4,476 | 451 | 15.3% | 22% | 76% | -20% | 32% |
| Dynatrace, Inc. | 7.9x | 15,507 | 1,699 | 15.2% | 19% | 82% | 11% | 28% |
| Waystar Holding Corp. | 7.8x | 8,082 | 975 | 6.3% | 18% | 67% | 18% | 30% |
| OneStream, Inc. | 7.4x | 4,512 | 515 | 18.7% | 27% | 63% | -69% | 40% |
| Q2 Holdings, Inc. | 7.4x | 5,884 | 721 | 11.1% | 13% | 52% | -3% | 24% |
| Clearwater Analytics Holdings, Inc. | 7.1x | 5,751 | 476 | 70.0% | 23% | 73% | 6% | 28% |
| Qualys, Inc. | 6.9x | 4,599 | 622 | 6.8% | 9% | 82% | 31% | 38% |
| Klaviyo, Inc. | 6.9x | 8,482 | 1,007 | 22.4% | 34% | 76% | -9% | 17% |
| Adobe Inc. | 6.7x | 164,982 | 22,601 | 8.9% | 11% | 89% | 37% | 37% |
| Constellation Software Inc. | 6.6x | 80,564 | 10,367 | 17.5% | 17% | 36% | 15% | 22% |
| SPS Commerce, Inc. | 6.5x | 5,086 | 670 | 17.3% | 19% | 68% | 15% | 19% |
| GitLab Inc. | 6.5x | 6,392 | 805 | 23.0% | 29% | 89% | -14% | -2% |
| Confluent, Inc. | 6.4x | 7,678 | 1,018 | 17.4% | 24% | 74% | -40% | 17% |
| MongoDB, Inc. | 6.3x | 14,777 | 2,105 | 12.1% | 19% | 73% | -8% | 20% |
| Salesforce, Inc. | 6.1x | 255,304 | 38,591 | 9.0% | 8% | 77% | 21% | 38% |
| Workday, Inc. | 6.1x | 59,466 | 8,696 | 12.7% | 15% | 76% | 7% | 28% |
| Paycom Software, Inc. | 6.0x | 12,523 | 1,914 | 8.7% | 10% | 86% | 22% | 16% |
| Paylocity Holding Corporation | 5.9x | 9,830 | 1,552 | 8.3% | 15% | 69% | 19% | 22% |
| C3.ai, Inc. | 5.7x | 2,619 | 389 | 19.2% | 25% | 61% | -83% | 15% |
| Okta, Inc. | 5.4x | 15,724 | 2,681 | 9.1% | 14% | 77% | 1% | 30% |
| Pegasystems Inc. | 5.3x | 8,973 | 1,643 | 2.6% | 14% | 76% | 17% | 27% |
| BlackLine, Inc. | 5.1x | 3,619 | 663 | 7.8% | 9% | 75% | 4% | 21% |
| Couchbase, Inc. | 5.0x | 1,199 | 215 | 10.9% | 13% | 88% | -35% | 11% |
| SentinelOne, Inc. | 5.0x | 5,285 | 864 | 21.3% | 28% | 75% | -38% | 25% |
| Elastic N.V. | 4.9x | 8,102 | 1,483 | 12.4% | 17% | 75% | -4% | 26% |
| Dayforce Inc. | 4.8x | 9,530 | 1,810 | 9.4% | 15% | 50% | 5% | 16% |
| International Business Machines Corporation | 4.7x | 317,514 | 62,832 | 6.7% | 1% | 57% | 16% | 19% |
| Informatica Inc. | 4.7x | 7,994 | 1,655 | 3.0% | 2% | 81% | 10% | 35% |
| DocuSign, Inc. | 4.7x | 14,923 | 3,031 | 5.8% | 8% | 79% | 8% | 38% |
| Box, Inc. | 4.6x | 5,406 | 1,102 | 7.9% | 5% | 79% | 7% | 32% |
| DigitalOcean Holdings, Inc. | 4.4x | 3,982 | 807 | 13.1% | 13% | 60% | 15% | 7% |
| Workiva Inc. | 4.3x | 3,842 | 769 | 16.9% | 17% | 77% | -10% | 13% |
| Progress Software Corporation | 4.2x | 4,134 | 869 | 12.7% | 22% | 86% | 20% | 33% |
| Tenable Holdings, Inc. | 4.1x | 4,086 | 923 | 7.5% | 12% | 78% | 1% | 29% |
| Freshworks Inc. | 4.1x | 3,443 | 752 | 12.1% | 20% | 84% | -14% | 29% |
| Dropbox, Inc. | 4.0x | 9,880 | 2,542 | -2.8% | 1% | 82% | 23% | 33% |
| Amplitude, Inc. | 4.0x | 1,345 | 307 | 10.7% | 9% | 74% | -35% | 11% |
| VTEX | 3.9x | 1,001 | 228 | 11.9% | 8% | 75% | 5% | 8% |
| EverCommerce Inc. | 3.9x | 2,314 | 703 | -14.7% | 8% | 68% | 7% | 16% |
| ZoomInfo Technologies Inc. | 3.8x | 4,575 | 1,210 | -1.1% | -3% | 88% | 17% | 29% |
| Asana, Inc. | 3.7x | 2,972 | 739 | 8.3% | 10% | 89% | -31% | 18% |
| AvidXchange Holdings, Inc. | 3.7x | 1,707 | 441 | 5.0% | 10% | 72% | -1% | 13% |
| Braze, Inc. | 3.6x | 2,668 | 620 | 18.5% | 23% | 69% | -20% | 17% |
| Twilio Inc. | 3.6x | 17,639 | 4,583 | 7.1% | 9% | 51% | 1% | 15% |
| Appian Corporation | 3.3x | 2,329 | 634 | 10.6% | 13% | 76% | -6% | 11% |
| Zoom Communications Inc. | 3.3x | 15,861 | 4,699 | 3.1% | 3% | 76% | 18% | 38% |
| Docebo Inc. | 3.2x | 762 | 223 | 8.5% | 17% | 81% | 8% | 19% |
| DoubleVerify Holdings, Inc. | 3.1x | 2,364 | 681 | 11.2% | 15% | 82% | 12% | 24% |
| BILL Holdings, Inc. | 2.8x | 4,367 | 1,423 | 11.5% | 15% | 85% | -6% | 15% |
| PagerDuty, Inc. | 2.6x | 1,292 | 476 | 6.0% | 9% | 83% | -10% | 30% |
| Open Text Corporation | 2.5x | 12,872 | 5,220 | -1.8% | -11% | 76% | 19% | 57% |
| Sprout Social, Inc. | 2.5x | 1,152 | 418 | 10.7% | 18% | 78% | -13% | 21% |
| PROS Holdings, Inc. | 2.4x | 893 | 336 | 10.1% | 8% | 67% | -4% | 12% |
| Yext, Inc. | 2.2x | 1,018 | 434 | 4.8% | 8% | 77% | 2% | 32% |
| Domo, Inc. | 2.1x | 650 | 317 | -0.2% | -1% | 74% | -17% | 16% |
| Jamf Holding Corp. | 2.0x | 1,422 | 643 | 10.0% | 11% | 80% | -7% | 14% |
| Enghouse Systems Limited | 2.0x | 760 | 365 | 3.2% | 5% | 64% | 18% | 23% |
| Sprinklr, Inc. | 2.0x | 1,670 | 806 | 3.3% | 7% | 71% | 4% | 13% |
| Upland Software, Inc. | 2.0x | 406 | 268 | -22.7% | -8% | 71% | -4% | 21% |
| Asure Software, Inc. | 2.0x | 270 | 123 | 12.4% | 5% | 68% | -10% | -7% |
| Five9, Inc. | 1.9x | 2,212 | 1,075 | 8.6% | 14% | 55% | -1% | 20% |
| RingCentral, Inc. | 1.6x | 4,004 | 2,428 | 5.0% | 8% | 71% | 2% | 27% |
| Kaltura, Inc. | 1.5x | 276 | 181 | 0.4% | 2% | 68% | -9% | 13% |
| Riskified Ltd. | 1.3x | 462 | 333 | 3.3% | 9% | 51% | -14% | 13% |
| Rackspace Technology, Inc. | 1.3x | 3,485 | 2,712 | -1.1% | -6% | 20% | -4% | 11% |
| BigCommerce Holdings, Inc. | 1.3x | 447 | 335 | 3.7% | 5% | 77% | -6% | 15% |
| Expensify, Inc. | 1.3x | 186 | 142 | 4.0% | -2% | 52% | 0% | 25% |
| eGain Corporation | 1.1x | 106 | 88 | 7.4% | -8% | 69% | 3% | 7% |
| ON24, Inc. | 0.4x | 52 | 145 | -6.2% | -8% | 75% | -32% | 22% |
| Top 10 Average | 22.8x | 476,386 | 31,044 | 21.8% | 26% | 73% | 2% | 23% |
| Top 10 Median | 15.1x | 97,819 | 3,477 | 21.3% | 26% | 77% | -2% | 28% |
| Overall Average | 6.9x | 79,046 | 6,887 | 11.0% | 13% | 72% | -1% | 22% |
| Overall Median | 4.8x | 5,345 | 949 | 10.3% | 13% | 75% | 1% | 22% |
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 (> 20%)
12.7x
|
|
Multiple
|
Growth
|
|---|---|---|
| Clearwater Analytics Holdings, Inc. | 7.1x | 70.0% |
| Palantir Technologies Inc. | 76.4x | 33.1% |
| Cloudflare, Inc. | 30.4x | 25.4% |
| monday.com Ltd. | 11.4x | 24.4% |
| Snowflake Inc. | 15.2x | 24.1% |
| GitLab Inc. | 6.5x | 23.0% |
| Klaviyo, Inc. | 6.9x | 22.4% |
| Samsara Inc. | 13.3x | 22.1% |
| CrowdStrike Holdings, Inc. | 24.5x | 21.6% |
| SentinelOne, Inc. | 5.0x | 21.3% |
| Shopify Inc. | 12.7x | 20.9% |
EV/NTM Revenue Multiple
Average Growth (10%-20%)
5.9x
|
|
Multiple
|
Growth
|
|---|---|---|
| Zscaler, Inc. | 15.4x | 19.8% |
| C3.ai, Inc. | 5.7x | 19.2% |
| Datadog, Inc. | 13.0x | 18.9% |
| Atlassian Corporation | 8.8x | 18.8% |
| OneStream, Inc. | 7.4x | 18.7% |
| ServiceNow, Inc. | 15.1x | 18.6% |
| Braze, Inc. | 3.6x | 18.5% |
| Constellation Software Inc. | 6.6x | 17.5% |
| Confluent, Inc. | 6.4x | 17.4% |
| SPS Commerce, Inc. | 6.5x | 17.3% |
| Workiva Inc. | 4.3x | 16.9% |
| Oracle Corporation | 10.7x | 16.2% |
| ServiceTitan, Inc. | 10.0x | 15.9% |
| HubSpot, Inc. | 8.9x | 15.9% |
| JFrog Ltd. | 8.6x | 15.3% |
| Dynatrace, Inc. | 7.9x | 15.2% |
| Microsoft Corporation | 12.2x | 13.2% |
| DigitalOcean Holdings, Inc. | 4.4x | 13.1% |
| Workday, Inc. | 6.1x | 12.7% |
| Progress Software Corporation | 4.2x | 12.7% |
| Asure Software, Inc. | 2.0x | 12.4% |
| Elastic N.V. | 4.9x | 12.4% |
| Freshworks Inc. | 4.1x | 12.1% |
| MongoDB, Inc. | 6.3x | 12.1% |
| VTEX | 3.9x | 11.9% |
| BILL Holdings, Inc. | 2.8x | 11.5% |
| DoubleVerify Holdings, Inc. | 3.1x | 11.2% |
| Q2 Holdings, Inc. | 7.4x | 11.1% |
| Couchbase, Inc. | 5.0x | 10.9% |
| Sprout Social, Inc. | 2.5x | 10.7% |
| Amplitude, Inc. | 4.0x | 10.7% |
| Appian Corporation | 3.3x | 10.6% |
| PROS Holdings, Inc. | 2.4x | 10.1% |
| Jamf Holding Corp. | 2.0x | 10.0% |
EV/NTM Revenue Multiple
Low Growth (< 10%)
3.7x
|
|
Multiple
|
Growth
|
|---|---|---|
| The Descartes Systems Group Inc. | 11.6x | 9.7% |
| Dayforce Inc. | 4.8x | 9.4% |
| Okta, Inc. | 5.4x | 9.1% |
| Salesforce, Inc. | 6.1x | 9.0% |
| Adobe Inc. | 6.7x | 8.9% |
| Paycom Software, Inc. | 6.0x | 8.7% |
| Five9, Inc. | 1.9x | 8.6% |
| Docebo Inc. | 3.2x | 8.5% |
| Paylocity Holding Corporation | 5.9x | 8.3% |
| Asana, Inc. | 3.7x | 8.3% |
| Box, Inc. | 4.6x | 7.9% |
| BlackLine, Inc. | 5.1x | 7.8% |
| Tenable Holdings, Inc. | 4.1x | 7.5% |
| eGain Corporation | 1.1x | 7.4% |
| Twilio Inc. | 3.6x | 7.1% |
| Qualys, Inc. | 6.9x | 6.8% |
| International Business Machines Corporation | 4.7x | 6.7% |
| Waystar Holding Corp. | 7.8x | 6.3% |
| PagerDuty, Inc. | 2.6x | 6.0% |
| DocuSign, Inc. | 4.7x | 5.8% |
| RingCentral, Inc. | 1.6x | 5.0% |
| AvidXchange Holdings, Inc. | 3.7x | 5.0% |
| Yext, Inc. | 2.2x | 4.8% |
| Expensify, Inc. | 1.3x | 4.0% |
| BigCommerce Holdings, Inc. | 1.3x | 3.7% |
| Riskified Ltd. | 1.3x | 3.3% |
| Sprinklr, Inc. | 2.0x | 3.3% |
| Enghouse Systems Limited | 2.0x | 3.2% |
| Zoom Communications Inc. | 3.3x | 3.1% |
| Informatica Inc. | 4.7x | 3.0% |
| Pegasystems Inc. | 5.3x | 2.6% |
| Manhattan Associates, Inc. | 11.0x | 2.2% |
| Kaltura, Inc. | 1.5x | 0.4% |
| Domo, Inc. | 2.1x | -0.2% |
| ZoomInfo Technologies Inc. | 3.8x | -1.1% |
| Rackspace Technology, Inc. | 1.3x | -1.1% |
| Open Text Corporation | 2.5x | -1.8% |
| Dropbox, Inc. | 4.0x | -2.8% |
| ON24, Inc. | 0.4x | -6.2% |
| EverCommerce Inc. | 3.9x | -14.7% |
| Upland Software, Inc. | 2.0x | -22.7% |
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.
* PLTR (76.4x, 33.1% NTM Growth) have been excluded to enhance visual meaning of this chart.
Enterprise Software Operating Metrics
Last updated Q1 2025
Median
Net Dollar Retention
108.0%
Median
ARR Growth
13.4%
Median
Payback Period
35 months
Top 10*
Net Dollar Retention
114.0%
Top 10*
ARR Growth
24.6%
Top 10*
Payback Period
29 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$13.7B
- Series B$61.9B
- Series C$99.6B
- Series D$129.8B
Average
Pre Money Valuation
- Series A$66.8B
- Series B$348.4B
- Series C$1,416.0B
- Series D$1,083.7B
Average
Post Money Valuation
- Series A$79.9B
- Series B$414.4B
- Series C$1,529.9B
- Series D$1,204.6B
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.