Software Index
State of the Market
September marked another milestone for equity markets, with the Nasdaq and S&P 500 hitting record highs. Fueled by expectations of Federal Reserve interest rate cuts and robust corporate earnings, the rally was led by AI giants like Nvidia and Microsoft, which saw strong revenue growth.
Software continued to drive market momentum, with a landmark deal between Oracle and OpenAI. Oracle will provide its cloud infrastructure to power OpenAI’s next-generation AI models in a multi-year agreement valued at approximately $300 billion. The deal, part of Project Stargate, aims to enhance AI scalability and enterprise adoption by delivering massive compute capacity. This partnership underscores the software sector’s pivotal role in AI innovation, with Oracle’s stock surging 36% upon deal announcement.
Despite modest market confidence, the Bureau of Labor Statistics delivered a sobering update on September 9th. Preliminary benchmark revisions slashed nonfarm payroll estimates by 911,000 jobs for the period from April 2024 to March 2025, marking the largest adjustment in over a decade. Additionally, August nonfarm payrolls grew by only 22,000 jobs, a sharp miss from the 75,000 expected and the weakest gain since late 2024. This shortfall, 71% below forecast, suggests overstated hiring may mask underlying labor market weakness, raising recession concerns.
The labor market data has cemented expectations for Federal Reserve action. According to the CME FedWatch Tool, there is a 94.5% probability of a 0.25% rate cut at the September meeting. While this could provide economic relief, the effectiveness of rate cuts hinges on clearer labor market trends.
Despite labor market concerns, broader economic indicators remain strong. Q2 GDP grew at a 3.3% annualized rate, driven by higher consumer spending and exports. Q3 GDP forecasts have been upgraded to 3.1% growth. The IMF also recently revised its 2025 global GDP forecast to 3.0% from 2.8%, citing resilient U.S. consumption and China’s stimulus, though it warned that escalating tariffs could reduce global growth by 0.2–0.4 percentage points.
Inflation showed signs of reacceleration but remains manageable. In August, the Consumer Price Index rose 2.9% year-over-year, up from 2.7% in July. Higher shelter costs and tariff-related pass-throughs drove the increase, though a 0.2% decline in grocery prices and stable energy costs provided some offset. The Producer Price Index for August unexpectedly fell 0.1% month-over-month, lowering annual inflation to 2.6% from 3.1% in July. Businesses absorbed some tariff costs, though service prices remained steady at 2.9%.
Markets reflect a delicate balance of optimism and caution. Strong GDP growth, cooling producer prices, and anticipated Fed rate cuts provide a buffer. Key indicators to monitor include the September payroll report, Fed policy decisions, and U.S.-China trade talks, as they will shape a potentially volatile autumn.
Median
NTM Rev Multiple
4.7x
Top 10*
NTM Rev Multiple
14.0x
Median
NTM Rev Growth
10%
Top 10*
NTM Rev Growth
22%
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. | 75.7x | 366,104 | 3,441 | 40.6% | 39% | 80% | 17% | 37% |
| Cloudflare, Inc. | 30.4x | 72,234 | 1,881 | 26.3% | 27% | 76% | -10% | 19% |
| CrowdStrike Holdings, Inc. | 19.4x | 102,206 | 4,341 | 21.7% | 23% | 74% | -7% | 33% |
| Snowflake Inc. | 15.4x | 78,743 | 4,116 | 24.1% | 28% | 67% | -34% | 29% |
| Shopify Inc. | 14.4x | 178,104 | 10,014 | 23.5% | 29% | 49% | 15% | 9% |
| Zscaler, Inc. | 13.6x | 41,359 | 2,547 | 19.9% | 25% | 77% | -5% | 29% |
| ServiceNow, Inc. | 12.7x | 182,012 | 12,057 | 18.7% | 21% | 79% | 14% | 33% |
| Datadog, Inc. | 12.4x | 45,020 | 3,016 | 20.3% | 26% | 80% | -1% | 27% |
| Samsara Inc. | 12.0x | 19,635 | 1,335 | 22.1% | 32% | 77% | -11% | 18% |
| Microsoft Corporation | 11.7x | 3,783,930 | 281,724 | 14.5% | 15% | 69% | 46% | 22% |
| Manhattan Associates, Inc. | 11.6x | 12,845 | 1,058 | 4.4% | 6% | 56% | 26% | 27% |
| The Descartes Systems Group Inc. | 11.5x | 8,401 | 668 | 9.6% | 14% | 76% | 29% | 28% |
| Oracle Corporation | 11.0x | 733,428 | 57,399 | 16.0% | 8% | 71% | 31% | 5% |
| ServiceTitan, Inc. | 10.0x | 9,464 | 817 | 15.9% | 28% | 66% | -29% | N/A |
| JFrog Ltd. | 9.5x | 5,166 | 475 | 14.8% | 22% | 76% | -20% | 37% |
| MongoDB, Inc. | 9.2x | 23,401 | 2,218 | 14.1% | 22% | 72% | -7% | 13% |
| Clearwater Analytics Holdings, Inc. | 7.8x | 6,825 | 551 | 58.3% | 37% | 71% | 5% | 25% |
| Atlassian Corporation | 7.3x | 44,940 | 5,215 | 18.4% | 20% | 83% | -3% | 32% |
| HubSpot, Inc. | 7.2x | 24,071 | 2,848 | 16.9% | 19% | 85% | -2% | 21% |
| GitLab Inc. | 6.9x | 6,873 | 805 | 23.0% | 29% | 89% | -14% | -2% |
| Waystar Holding Corp. | 6.9x | 7,515 | 1,011 | 7.2% | 17% | 67% | 23% | 34% |
| Dynatrace, Inc. | 6.9x | 13,998 | 1,777 | 15.0% | 19% | 82% | 11% | 28% |
| Klaviyo, Inc. | 6.7x | 8,895 | 1,078 | 22.8% | 33% | 75% | -10% | 17% |
| Qualys, Inc. | 6.4x | 4,336 | 637 | 6.9% | 10% | 82% | 31% | 35% |
| monday.com Ltd. | 6.2x | 8,425 | 1,100 | 23.6% | 30% | 89% | -2% | 23% |
| Adobe Inc. | 6.2x | 152,180 | 22,601 | 8.9% | 11% | 89% | 37% | 37% |
| Q2 Holdings, Inc. | 6.0x | 4,923 | 743 | 11.2% | 13% | 53% | 0% | 24% |
| Constellation Software Inc. | 5.8x | 73,436 | 10,742 | 18.8% | 16% | 37% | 16% | 23% |
| Paycom Software, Inc. | 5.8x | 12,328 | 1,960 | 9.4% | 10% | 86% | 22% | 22% |
| Salesforce, Inc. | 5.7x | 239,587 | 38,591 | 9.0% | 8% | 77% | 21% | 38% |
| Dayforce Inc. | 5.7x | 11,614 | 1,852 | 10.9% | 13% | 51% | 6% | 16% |
| Paylocity Holding Corporation | 5.7x | 9,706 | 1,595 | 7.6% | 14% | 69% | 19% | 22% |
| Workday, Inc. | 5.7x | 57,219 | 8,959 | 13.1% | 14% | 76% | 9% | 28% |
| OneStream, Inc. | 5.2x | 3,329 | 546 | 17.5% | 25% | 64% | -69% | 43% |
| Pegasystems Inc. | 5.2x | 8,942 | 1,676 | 3.7% | 12% | 75% | 17% | 28% |
| SPS Commerce, Inc. | 5.1x | 4,085 | 704 | 13.7% | 21% | 68% | 15% | 19% |
| Couchbase, Inc. | 5.1x | 1,209 | 215 | 11.0% | 13% | 88% | -35% | 11% |
| SentinelOne, Inc. | 5.0x | 5,493 | 907 | 20.8% | 25% | 75% | -36% | 24% |
| Workiva Inc. | 4.9x | 4,587 | 807 | 16.2% | 19% | 77% | -10% | 17% |
| Confluent, Inc. | 4.9x | 6,014 | 1,065 | 16.4% | 23% | 74% | -37% | 16% |
| Okta, Inc. | 4.8x | 14,436 | 2,763 | 8.8% | 13% | 77% | 3% | 33% |
| BlackLine, Inc. | 4.7x | 3,464 | 674 | 8.4% | 8% | 75% | 5% | 19% |
| Elastic N.V. | 4.7x | 8,139 | 1,551 | 11.5% | 17% | 75% | -2% | 27% |
| Informatica Inc. | 4.7x | 8,156 | 1,662 | 4.5% | 1% | 81% | 9% | 35% |
| DocuSign, Inc. | 4.6x | 14,674 | 3,031 | 5.8% | 8% | 79% | 8% | 38% |
| DigitalOcean Holdings, Inc. | 4.6x | 4,346 | 833 | 14.4% | 13% | 60% | 16% | 6% |
| Box, Inc. | 4.3x | 5,215 | 1,126 | 7.9% | 6% | 79% | 7% | 32% |
| EverCommerce Inc. | 4.1x | 2,488 | 711 | -14.5% | 14% | 68% | 8% | 14% |
| International Business Machines Corporation | 4.1x | 279,167 | 64,040 | 6.6% | 3% | 58% | 17% | 23% |
| Asana, Inc. | 4.1x | 3,244 | 739 | 8.2% | 10% | 89% | -31% | 18% |
| Dropbox, Inc. | 4.0x | 9,931 | 2,533 | -2.2% | 0% | 81% | 25% | 34% |
| ZoomInfo Technologies Inc. | 4.0x | 4,844 | 1,225 | -0.6% | -1% | 88% | 20% | 24% |
| C3.ai, Inc. | 3.9x | 1,643 | 389 | 8.0% | 25% | 61% | -83% | 15% |
| Tenable Holdings, Inc. | 3.7x | 3,777 | 949 | 7.6% | 11% | 78% | 1% | 30% |
| AvidXchange Holdings, Inc. | 3.6x | 1,732 | 447 | 6.7% | 8% | 73% | -2% | 14% |
| Braze, Inc. | 3.6x | 2,623 | 620 | 18.5% | 23% | 69% | -20% | 17% |
| Freshworks Inc. | 3.5x | 3,035 | 782 | 11.9% | 20% | 85% | -9% | 30% |
| Progress Software Corporation | 3.5x | 3,383 | 869 | 12.3% | 22% | 86% | 20% | 34% |
| Amplitude, Inc. | 3.4x | 1,232 | 317 | 13.1% | 10% | 74% | -34% | 15% |
| Zoom Communications Inc. | 3.4x | 16,644 | 4,754 | 3.2% | 4% | 76% | 20% | 40% |
| Docebo Inc. | 3.4x | 832 | 231 | 7.8% | 15% | 81% | 8% | 5% |
| Appian Corporation | 3.3x | 2,402 | 658 | 11.7% | 14% | 76% | -1% | 13% |
| DoubleVerify Holdings, Inc. | 3.2x | 2,549 | 714 | 10.7% | 17% | 82% | 12% | 23% |
| Twilio Inc. | 2.9x | 14,764 | 4,729 | 8.1% | 12% | 50% | 2% | 16% |
| PagerDuty, Inc. | 2.8x | 1,427 | 476 | 6.0% | 9% | 83% | -10% | 30% |
| BILL Holdings, Inc. | 2.7x | 4,285 | 1,463 | 9.8% | 13% | 84% | -6% | 17% |
| Open Text Corporation | 2.7x | 13,899 | 5,168 | 1.2% | -10% | 76% | 20% | 22% |
| PROS Holdings, Inc. | 2.4x | 911 | 343 | 10.7% | 8% | 67% | -4% | 11% |
| Yext, Inc. | 2.4x | 1,090 | 434 | 4.8% | 8% | 77% | 2% | 32% |
| Domo, Inc. | 2.1x | 681 | 318 | 0.7% | 0% | 75% | -14% | 23% |
| Jamf Holding Corp. | 2.1x | 1,547 | 666 | 10.1% | 11% | 79% | -6% | 24% |
| VTEX | 2.1x | 536 | 230 | 10.9% | 5% | 76% | 6% | 12% |
| Upland Software, Inc. | 2.1x | 425 | 252 | -19.4% | -12% | 72% | -1% | 19% |
| Sprinklr, Inc. | 2.1x | 1,717 | 806 | 3.4% | 7% | 71% | 4% | 13% |
| Enghouse Systems Limited | 2.0x | 733 | 365 | 2.5% | 5% | 64% | 18% | 23% |
| Five9, Inc. | 1.9x | 2,244 | 1,106 | 8.2% | 14% | 55% | 1% | 20% |
| Sprout Social, Inc. | 1.8x | 858 | 431 | 11.5% | 15% | 78% | -12% | 20% |
| RingCentral, Inc. | 1.6x | 4,100 | 2,456 | 5.1% | 6% | 71% | 3% | 27% |
| Asure Software, Inc. | 1.6x | 237 | 125 | 20.7% | 8% | 68% | -10% | -2% |
| Rackspace Technology, Inc. | 1.3x | 3,505 | 2,693 | 0.2% | -5% | 20% | -3% | 12% |
| Riskified Ltd. | 1.2x | 436 | 336 | 5.7% | 8% | 50% | -13% | 13% |
| Kaltura, Inc. | 1.2x | 219 | 181 | 0.4% | 3% | 69% | -5% | 13% |
| Commerce.com, Inc. | 1.2x | 407 | 338 | 4.1% | 4% | 78% | -4% | 16% |
| eGain Corporation | 1.1x | 107 | 88 | 7.4% | -8% | 69% | 3% | 7% |
| Expensify, Inc. | 0.9x | 127 | 144 | 0.1% | 4% | 51% | -8% | 28% |
| ON24, Inc. | 0.5x | 64 | 143 | -5.0% | -7% | 75% | -30% | 23% |
| Top 10 Average | 21.8x | 486,935 | 32,447 | 23.2% | 27% | 73% | 2% | 26% |
| Top 10 Median | 14.0x | 90,475 | 3,778 | 21.9% | 27% | 76% | -3% | 28% |
| Overall Average | 6.5x | 79,475 | 7,093 | 11.2% | 14% | 73% | 0% | 22% |
| Overall Median | 4.7x | 5,190 | 980 | 10.4% | 13% | 75% | 1% | 23% |
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%)
12.0x
|
|
Multiple
|
Growth
|
|---|---|---|
| Clearwater Analytics Holdings, Inc. | 7.8x | 58.3% |
| Palantir Technologies Inc. | 75.7x | 40.6% |
| Cloudflare, Inc. | 30.4x | 26.3% |
| Snowflake Inc. | 15.4x | 24.1% |
| monday.com Ltd. | 6.2x | 23.6% |
| Shopify Inc. | 14.4x | 23.5% |
| GitLab Inc. | 6.9x | 23.0% |
| Klaviyo, Inc. | 6.7x | 22.8% |
| Samsara Inc. | 12.0x | 22.1% |
| CrowdStrike Holdings, Inc. | 19.4x | 21.7% |
| SentinelOne, Inc. | 5.0x | 20.8% |
| Asure Software, Inc. | 1.6x | 20.7% |
| Datadog, Inc. | 12.4x | 20.3% |
EV/NTM Revenue Multiple
Average Growth (10%-20%)
5.1x
|
|
Multiple
|
Growth
|
|---|---|---|
| Zscaler, Inc. | 13.6x | 19.9% |
| Constellation Software Inc. | 5.8x | 18.8% |
| ServiceNow, Inc. | 12.7x | 18.7% |
| Braze, Inc. | 3.6x | 18.5% |
| Atlassian Corporation | 7.3x | 18.4% |
| OneStream, Inc. | 5.2x | 17.5% |
| HubSpot, Inc. | 7.2x | 16.9% |
| Confluent, Inc. | 4.9x | 16.4% |
| Workiva Inc. | 4.9x | 16.2% |
| Oracle Corporation | 11.0x | 16.0% |
| ServiceTitan, Inc. | 10.0x | 15.9% |
| Dynatrace, Inc. | 6.9x | 15.0% |
| JFrog Ltd. | 9.5x | 14.8% |
| Microsoft Corporation | 11.7x | 14.5% |
| DigitalOcean Holdings, Inc. | 4.6x | 14.4% |
| MongoDB, Inc. | 9.2x | 14.1% |
| SPS Commerce, Inc. | 5.1x | 13.7% |
| Workday, Inc. | 5.7x | 13.1% |
| Amplitude, Inc. | 3.4x | 13.1% |
| Progress Software Corporation | 3.5x | 12.3% |
| Freshworks Inc. | 3.5x | 11.9% |
| Appian Corporation | 3.3x | 11.7% |
| Elastic N.V. | 4.7x | 11.5% |
| Sprout Social, Inc. | 1.8x | 11.5% |
| Q2 Holdings, Inc. | 6.0x | 11.2% |
| Couchbase, Inc. | 5.1x | 11.0% |
| VTEX | 2.1x | 10.9% |
| Dayforce Inc. | 5.7x | 10.9% |
| DoubleVerify Holdings, Inc. | 3.2x | 10.7% |
| PROS Holdings, Inc. | 2.4x | 10.7% |
| Jamf Holding Corp. | 2.1x | 10.1% |
EV/NTM Revenue Multiple
Low Growth (< 10%)
3.7x
|
|
Multiple
|
Growth
|
|---|---|---|
| BILL Holdings, Inc. | 2.7x | 9.8% |
| The Descartes Systems Group Inc. | 11.5x | 9.6% |
| Paycom Software, Inc. | 5.8x | 9.4% |
| Salesforce, Inc. | 5.7x | 9.0% |
| Adobe Inc. | 6.2x | 8.9% |
| Okta, Inc. | 4.8x | 8.8% |
| BlackLine, Inc. | 4.7x | 8.4% |
| Asana, Inc. | 4.1x | 8.2% |
| Five9, Inc. | 1.9x | 8.2% |
| Twilio Inc. | 2.9x | 8.1% |
| C3.ai, Inc. | 3.9x | 8.0% |
| Box, Inc. | 4.3x | 7.9% |
| Docebo Inc. | 3.4x | 7.8% |
| Paylocity Holding Corporation | 5.7x | 7.6% |
| Tenable Holdings, Inc. | 3.7x | 7.6% |
| eGain Corporation | 1.1x | 7.4% |
| Waystar Holding Corp. | 6.9x | 7.2% |
| Qualys, Inc. | 6.4x | 6.9% |
| AvidXchange Holdings, Inc. | 3.6x | 6.7% |
| International Business Machines Corporation | 4.1x | 6.6% |
| PagerDuty, Inc. | 2.8x | 6.0% |
| DocuSign, Inc. | 4.6x | 5.8% |
| Riskified Ltd. | 1.2x | 5.7% |
| RingCentral, Inc. | 1.6x | 5.1% |
| Yext, Inc. | 2.4x | 4.8% |
| Informatica Inc. | 4.7x | 4.5% |
| Manhattan Associates, Inc. | 11.6x | 4.4% |
| Commerce.com, Inc. | 1.2x | 4.1% |
| Pegasystems Inc. | 5.2x | 3.7% |
| Sprinklr, Inc. | 2.1x | 3.4% |
| Zoom Communications Inc. | 3.4x | 3.2% |
| Enghouse Systems Limited | 2.0x | 2.5% |
| Open Text Corporation | 2.7x | 1.2% |
| Domo, Inc. | 2.1x | 0.7% |
| Kaltura, Inc. | 1.2x | 0.4% |
| Rackspace Technology, Inc. | 1.3x | 0.2% |
| Expensify, Inc. | 0.9x | 0.1% |
| ZoomInfo Technologies Inc. | 4.0x | -0.6% |
| Dropbox, Inc. | 4.0x | -2.2% |
| ON24, Inc. | 0.5x | -5.0% |
| EverCommerce Inc. | 4.1x | -14.5% |
| Upland Software, Inc. | 2.1x | -19.4% |
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.
* PLTR (75.7x, 40.6% NTM Growth), CWAN (7.8x, 58.3% NTM Growth) have been excluded to enhance visual meaning of this chart.
Enterprise Software Operating Metrics
Last updated Q2 2025
Median
Net Dollar Retention
109.0%
Median
ARR Growth
13.6%
Median
Payback Period
36 months
Top 10*
Net Dollar Retention
120.0%
Top 10*
ARR Growth
27.8%
Top 10*
Payback Period
26 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$29.5B
- Series B$61.5B
- Series C$97.3B
- Series D$107.7B
Average
Pre Money Valuation
- Series A$207.3B
- Series B$414.8B
- Series C$1,367.3B
- Series D$1,286.3B
Average
Post Money Valuation
- Series A$239.8B
- Series B$478.3B
- Series C$1,477.4B
- Series D$1,390.7B
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.