Software Index
State of the Market
The year 2025 reflected steady demand in the software and AI sector, supported by enterprise investments in cloud and automation tools amid continuing trade uncertainties. Alphabet’s annual revenue for 2025 is estimated at $400 billion, up 14.0% year over year, with Google Cloud revenues projected to surge 34.0% to $58 billion, driven by AI infrastructure expansions and key partnerships. This expansion continues with the recently announced Apple-Gemini integration for advanced Siri capabilities. Alphabet’s trajectory emphasized the sector’s focus on full-stack AI solutions, enabling broader enterprise adoption. However, Google’s estimated capital expenditures of $92 billion highlight the intensive investments required to sustain cloud infrastructure in an increasingly competitive landscape.
The lack of dramatic movements thus far in 2026 reflects caution. Broader indices have expressed restraint, with the Dow posting modest gains and the Nasdaq edging lower in early sessions. Overall, January has marked a subdued start for equity markets after a robust 2025, during which the S&P 500 had advanced 17.9% amid AI-driven gains and resilient corporate earnings.
The labor market presented mixed signals in December, adding 50,000 nonfarm payrolls (below the expected 73,000 and a downward revision from November’s 56,000). Yet the unemployment rate dipped to 4.4%, signaling underlying stability. For 2025 overall, job growth totaled 584,000, a sharp slowdown from 2024's 2.0 million amid tariff uncertainties and tighter immigration policies.
Inflation remained steady, with the Consumer Price Index rising 0.3% monthly in December for a 2.7% annual rate, unchanged from November. Shelter costs drove the uptick, offset by stable energy prices. Producer prices for November increased 0.2% monthly and 3.0% annually, suggesting businesses absorbed some input costs, though tariff pass-throughs may loom.
The Federal Reserve cut rates by 25 basis points in December to a 3.5%–3.75% range, its third reduction of 2025, citing balanced risks to employment and inflation. Projections indicate just one cut for 2026, reflecting upgraded growth views despite trade headwinds. Economic output remained strong, with the third-quarter GDP estimate revised to 4.3% annualized, fueled by consumer spending and exports rebounding. Early estimates for fourth-quarter growth approach 5.3%, though data distortions from the recent government shutdown dampen estimate confidence. Trade tensions persist, with tariff pauses providing temporary relief but underscoring uneven growth patterns.
Looking forward, opportunities in technology and productivity gains offer buffers, but risks from reaccelerating inflation, potential tariff escalations, and softening labor demand could weigh on sentiment. Key events include the Fed’s January 27–28 meeting, fourth-quarter GDP release on February 20, and ongoing U.S.–China talks, shaping a potentially uneven path ahead.
Median
NTM Rev Multiple
4.2x
Top 10*
NTM Rev Multiple
13.6x
Median
NTM Rev Growth
11%
Top 10*
NTM Rev Growth
23%
Median
Gross Margin
75%
Top 10*
Gross Margin
75%
*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. | 72.9x | 417,551 | 3,896 | 47.0% | 47% | 81% | 22% | 30% |
| Cloudflare, Inc. | 26.7x | 68,516 | 2,013 | 27.4% | 28% | 75% | -10% | 18% |
| CrowdStrike Holdings, Inc. | 20.5x | 114,233 | 4,565 | 22.1% | 22% | 74% | -6% | 31% |
| Shopify Inc. | 15.3x | 203,648 | 10,696 | 24.8% | 30% | 49% | 16% | 11% |
| Figma, Inc. | 13.8x | 17,004 | 969 | 27.2% | 0% | 85% | -108% | 0% |
| Snowflake Inc. | 13.4x | 73,347 | 4,387 | 24.7% | 28% | 67% | -31% | 29% |
| JFrog Ltd. | 11.5x | 6,750 | 503 | 17.0% | 23% | 76% | -18% | 35% |
| MongoDB, Inc. | 11.5x | 31,920 | 2,317 | 20.0% | 21% | 72% | -7% | 15% |
| Datadog, Inc. | 11.5x | 44,827 | 3,212 | 21.7% | 27% | 80% | -1% | 26% |
| Microsoft Corporation | 10.7x | 3,612,809 | 293,812 | 15.0% | 16% | 69% | 46% | 19% |
| Samsara Inc. | 10.6x | 19,383 | 1,521 | 20.3% | 29% | 77% | -5% | 19% |
| ServiceNow, Inc. | 10.1x | 151,645 | 12,667 | 18.6% | 21% | 78% | 14% | 31% |
| Zscaler, Inc. | 10.0x | 34,384 | 2,833 | 21.6% | 23% | 77% | -4% | 34% |
| The Descartes Systems Group Inc. | 9.3x | 7,274 | 704 | 11.0% | 11% | 77% | 30% | 31% |
| Manhattan Associates, Inc. | 9.1x | 10,228 | 1,067 | 5.2% | 4% | 57% | 26% | 26% |
| ServiceTitan, Inc. | 9.1x | 9,638 | 916 | 15.5% | 26% | 69% | -28% | 14% |
| Oracle Corporation | 8.9x | 672,472 | 61,016 | 23.8% | 11% | 69% | 32% | -13% |
| Clearwater Analytics Holdings, Inc. | 8.6x | 7,789 | 640 | 41.7% | 51% | 69% | 3% | 24% |
| Netskope, Inc. | 8.0x | 6,560 | 661 | 24.2% | 0% | 66% | -88% | 0% |
| Confluent, Inc. | 7.5x | 9,796 | 1,113 | 16.7% | 22% | 74% | -35% | 18% |
| Klaviyo, Inc. | 6.3x | 8,937 | 1,154 | 22.5% | 33% | 75% | -8% | 18% |
| Atlassian Corporation | 6.2x | 41,108 | 5,460 | 20.8% | 20% | 83% | -3% | 30% |
| Qualys, Inc. | 5.9x | 4,157 | 653 | 8.0% | 10% | 82% | 33% | 36% |
| HubSpot, Inc. | 5.7x | 19,808 | 2,988 | 16.7% | 19% | 84% | -1% | 20% |
| DigitalOcean Holdings, Inc. | 5.7x | 5,781 | 864 | 17.8% | 14% | 61% | 18% | 23% |
| Waystar Holding Corp. | 5.7x | 7,100 | 1,040 | 20.2% | 15% | 68% | 25% | 30% |
| Adobe Inc. | 5.6x | 146,559 | 23,769 | 9.6% | 11% | 89% | 37% | 0% |
| Dynatrace, Inc. | 5.6x | 11,839 | 1,853 | 15.0% | 19% | 82% | 12% | 27% |
| Dayforce, Inc. | 5.5x | 11,667 | 1,893 | 11.3% | 12% | 51% | -1% | 11% |
| Salesforce, Inc. | 5.5x | 248,533 | 40,317 | 11.8% | 8% | 78% | 22% | 36% |
| Pegasystems Inc. | 5.5x | 9,861 | 1,732 | 4.2% | 17% | 76% | 17% | 26% |
| Q2 Holdings, Inc. | 5.3x | 4,483 | 770 | 10.7% | 14% | 53% | 3% | 22% |
| Workday, Inc. | 5.1x | 53,437 | 9,231 | 12.8% | 13% | 76% | 9% | 30% |
| Workiva Inc. | 4.9x | 4,777 | 846 | 16.5% | 20% | 78% | -7% | 17% |
| GitLab Inc. | 4.8x | 5,160 | 906 | 19.1% | 27% | 88% | -9% | 32% |
| International Business Machines Corporation | 4.7x | 328,677 | 65,402 | 6.2% | 5% | 58% | 18% | 20% |
| Paylocity Holding Corporation | 4.7x | 8,264 | 1,640 | 6.8% | 13% | 69% | 19% | 21% |
| BlackLine, Inc. | 4.6x | 3,443 | 687 | 8.4% | 7% | 75% | 5% | 21% |
| Navan, Inc. | 4.6x | 3,692 | 656 | 21.6% | 0% | 71% | -21% | 0% |
| OneStream, Inc. | 4.3x | 2,911 | 571 | 18.4% | 24% | 68% | -24% | 24% |
| Braze, Inc. | 4.3x | 3,549 | 693 | 19.1% | 23% | 68% | -18% | 24% |
| Okta, Inc. | 4.3x | 13,285 | 2,840 | 9.1% | 12% | 77% | 4% | 34% |
| EverCommerce Inc. | 4.3x | 2,609 | 718 | -14.6% | 22% | 68% | 9% | 12% |
| monday.com Ltd. | 4.2x | 5,987 | 1,166 | 21.9% | 29% | 89% | 0% | 22% |
| Constellation Software Inc. | 4.2x | 54,349 | 11,149 | 16.4% | 15% | 37% | 16% | 20% |
| C3.ai, Inc. | 4.1x | 1,284 | 353 | -10.6% | 2% | 52% | -117% | 8% |
| SPS Commerce, Inc. | 4.1x | 3,237 | 730 | 8.9% | 19% | 68% | 15% | 17% |
| Via Transportation, Inc. | 4.0x | 2,013 | 407 | 24.0% | 0% | 40% | -17% | 0% |
| Elastic N.V. | 3.9x | 7,144 | 1,609 | 13.5% | 17% | 76% | -2% | 28% |
| SentinelOne, Inc. | 3.9x | 4,459 | 956 | 20.1% | 24% | 75% | -32% | 26% |
| Box, Inc. | 3.9x | 4,805 | 1,151 | 7.7% | 7% | 79% | 6% | 32% |
| Paycom Software, Inc. | 3.9x | 8,459 | 2,001 | 9.2% | 10% | 87% | 22% | 19% |
| DocuSign, Inc. | 3.9x | 13,009 | 3,159 | 6.6% | 8% | 80% | 9% | 37% |
| Dropbox, Inc. | 3.8x | 9,522 | 2,528 | -1.5% | 0% | 81% | 26% | 35% |
| Twilio Inc. | 3.8x | 20,201 | 4,896 | 8.9% | 13% | 49% | 3% | 16% |
| ZoomInfo Technologies Inc. | 3.7x | 4,590 | 1,240 | 0.9% | 1% | 87% | 20% | 24% |
| Asana, Inc. | 3.6x | 3,037 | 774 | 8.5% | 9% | 89% | -28% | 19% |
| Zoom Communications, Inc. | 3.6x | 17,656 | 4,806 | 3.5% | 4% | 77% | 23% | 42% |
| Appian Corporation | 3.5x | 2,730 | 691 | 12.0% | 16% | 76% | 2% | 14% |
| Amplitude, Inc. | 3.4x | 1,285 | 330 | 14.4% | 13% | 74% | -34% | 15% |
| Progress Software Corporation | 3.2x | 3,195 | 940 | 5.2% | 31% | 85% | 19% | 34% |
| BILL Holdings, Inc. | 3.1x | 5,069 | 1,500 | 10.5% | 12% | 84% | -6% | 16% |
| Freshworks Inc. | 2.9x | 2,681 | 811 | 12.8% | 18% | 85% | -5% | 31% |
| Tenable Holdings, Inc. | 2.7x | 2,842 | 975 | 7.2% | 11% | 78% | 2% | 29% |
| Open Text Corporation | 2.6x | 13,606 | 5,188 | 0.5% | -8% | 76% | 20% | 22% |
| Jamf Holding Corp. | 2.6x | 1,976 | 691 | 9.8% | 12% | 79% | -2% | 30% |
| Docebo Inc. | 2.3x | 575 | 237 | 7.3% | 13% | 81% | 11% | 4% |
| eGain Corporation | 2.3x | 211 | 90 | 4.0% | 0% | 72% | 7% | 15% |
| Yext, Inc. | 2.2x | 1,030 | 448 | 3.4% | 9% | 76% | 5% | 19% |
| DoubleVerify Holdings, Inc. | 2.2x | 1,745 | 733 | 9.4% | 15% | 82% | 11% | 19% |
| PagerDuty, Inc. | 2.2x | 1,079 | 489 | 2.7% | 7% | 84% | -2% | 26% |
| Asure Software, Inc. | 2.0x | 319 | 132 | 18.6% | 15% | 67% | -10% | -6% |
| Upland Software, Inc. | 1.9x | 383 | 236 | -13.8% | -16% | 73% | 3% | 18% |
| VTEX | 1.8x | 469 | 234 | 11.8% | 4% | 76% | 7% | 15% |
| Sprinklr, Inc. | 1.7x | 1,487 | 839 | 4.1% | 6% | 69% | 6% | 16% |
| Enghouse Systems Limited | 1.7x | 625 | 356 | 3.7% | -1% | 64% | 18% | 21% |
| RingCentral, Inc. | 1.5x | 3,825 | 2,486 | 4.4% | 5% | 71% | 4% | 27% |
| Five9, Inc. | 1.4x | 1,690 | 1,127 | 8.1% | 12% | 56% | 4% | 20% |
| Domo, Inc. | 1.4x | 447 | 318 | 1.4% | 0% | 74% | -13% | 24% |
| Sprout Social, Inc. | 1.3x | 636 | 444 | 11.1% | 13% | 78% | -10% | 23% |
| Riskified Ltd. | 1.3x | 465 | 339 | 7.4% | 7% | 50% | -12% | 14% |
| Rackspace Technology, Inc. | 1.3x | 3,407 | 2,689 | 1.3% | -3% | 20% | -3% | 13% |
| Kaltura, Inc. | 1.2x | 220 | 181 | -1.1% | 2% | 70% | -3% | 12% |
| ON24, Inc. | 1.2x | 163 | 141 | -5.3% | -6% | 75% | -26% | 22% |
| Commerce.com, Inc. | 1.0x | 359 | 340 | 4.1% | 3% | 79% | -1% | 13% |
| Expensify, Inc. | 0.6x | 85 | 144 | 0.8% | 5% | 51% | -9% | 22% |
| Top 10 Average | 20.8x | 459,061 | 32,637 | 24.7% | 24% | 73% | -10% | 21% |
| Top 10 Median | 13.6x | 70,932 | 3,554 | 23.4% | 25% | 75% | -6% | 22% |
| Overall Average | 6.2x | 77,695 | 7,398 | 12.0% | 13% | 72% | -1% | 21% |
| Overall Median | 4.2x | 5,471 | 972 | 11.0% | 13% | 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 (> 20%)
8.9x
|
|
Multiple
|
Growth
|
|---|---|---|
| Palantir Technologies Inc. | 72.9x | 47.0% |
| Clearwater Analytics Holdings, Inc. | 8.6x | 41.7% |
| Cloudflare, Inc. | 26.7x | 27.4% |
| Figma, Inc. | 13.8x | 27.2% |
| Shopify Inc. | 15.3x | 24.8% |
| Snowflake Inc. | 13.4x | 24.7% |
| Netskope, Inc. | 8.0x | 24.2% |
| Via Transportation, Inc. | 4.0x | 24.0% |
| Oracle Corporation | 8.9x | 23.8% |
| Klaviyo, Inc. | 6.3x | 22.5% |
| CrowdStrike Holdings, Inc. | 20.5x | 22.1% |
| monday.com Ltd. | 4.2x | 21.9% |
| Datadog, Inc. | 11.5x | 21.7% |
| Navan, Inc. | 4.6x | 21.6% |
| Zscaler, Inc. | 10.0x | 21.6% |
| Atlassian Corporation | 6.2x | 20.8% |
| Samsara Inc. | 10.6x | 20.3% |
| Waystar Holding Corp. | 5.7x | 20.2% |
| SentinelOne, Inc. | 3.9x | 20.1% |
EV/NTM Revenue Multiple
Average Growth (10%-20%)
5.1x
|
|
Multiple
|
Growth
|
|---|---|---|
| MongoDB, Inc. | 11.5x | 20.0% |
| GitLab Inc. | 4.8x | 19.1% |
| Braze, Inc. | 4.3x | 19.1% |
| Asure Software, Inc. | 2.0x | 18.6% |
| ServiceNow, Inc. | 10.1x | 18.6% |
| OneStream, Inc. | 4.3x | 18.4% |
| DigitalOcean Holdings, Inc. | 5.7x | 17.8% |
| JFrog Ltd. | 11.5x | 17.0% |
| Confluent, Inc. | 7.5x | 16.7% |
| HubSpot, Inc. | 5.7x | 16.7% |
| Workiva Inc. | 4.9x | 16.5% |
| Constellation Software Inc. | 4.2x | 16.4% |
| ServiceTitan, Inc. | 9.1x | 15.5% |
| Dynatrace, Inc. | 5.6x | 15.0% |
| Microsoft Corporation | 10.7x | 15.0% |
| Amplitude, Inc. | 3.4x | 14.4% |
| Elastic N.V. | 3.9x | 13.5% |
| Freshworks Inc. | 2.9x | 12.8% |
| Workday, Inc. | 5.1x | 12.8% |
| Appian Corporation | 3.5x | 12.0% |
| VTEX | 1.8x | 11.8% |
| Salesforce, Inc. | 5.5x | 11.8% |
| Dayforce, Inc. | 5.5x | 11.3% |
| Sprout Social, Inc. | 1.3x | 11.1% |
| The Descartes Systems Group Inc. | 9.3x | 11.0% |
| Q2 Holdings, Inc. | 5.3x | 10.7% |
| BILL Holdings, Inc. | 3.1x | 10.5% |
EV/NTM Revenue Multiple
Low Growth (< 10%)
3.0x
|
|
Multiple
|
Growth
|
|---|---|---|
| Jamf Holding Corp. | 2.6x | 9.8% |
| Adobe Inc. | 5.6x | 9.6% |
| DoubleVerify Holdings, Inc. | 2.2x | 9.4% |
| Paycom Software, Inc. | 3.9x | 9.2% |
| Okta, Inc. | 4.3x | 9.1% |
| Twilio Inc. | 3.8x | 8.9% |
| SPS Commerce, Inc. | 4.1x | 8.9% |
| Asana, Inc. | 3.6x | 8.5% |
| BlackLine, Inc. | 4.6x | 8.4% |
| Five9, Inc. | 1.4x | 8.1% |
| Qualys, Inc. | 5.9x | 8.0% |
| Box, Inc. | 3.9x | 7.7% |
| Riskified Ltd. | 1.3x | 7.4% |
| Docebo Inc. | 2.3x | 7.3% |
| Tenable Holdings, Inc. | 2.7x | 7.2% |
| Paylocity Holding Corporation | 4.7x | 6.8% |
| DocuSign, Inc. | 3.9x | 6.6% |
| International Business Machines Corporation | 4.7x | 6.2% |
| Progress Software Corporation | 3.2x | 5.2% |
| Manhattan Associates, Inc. | 9.1x | 5.2% |
| RingCentral, Inc. | 1.5x | 4.4% |
| Pegasystems Inc. | 5.5x | 4.2% |
| Sprinklr, Inc. | 1.7x | 4.1% |
| Commerce.com, Inc. | 1.0x | 4.1% |
| eGain Corporation | 2.3x | 4.0% |
| Enghouse Systems Limited | 1.7x | 3.7% |
| Zoom Communications, Inc. | 3.6x | 3.5% |
| Yext, Inc. | 2.2x | 3.4% |
| PagerDuty, Inc. | 2.2x | 2.7% |
| Domo, Inc. | 1.4x | 1.4% |
| Rackspace Technology, Inc. | 1.3x | 1.3% |
| ZoomInfo Technologies Inc. | 3.7x | 0.9% |
| Expensify, Inc. | 0.6x | 0.8% |
| Open Text Corporation | 2.6x | 0.5% |
| Kaltura, Inc. | 1.2x | -1.1% |
| Dropbox, Inc. | 3.8x | -1.5% |
| ON24, Inc. | 1.2x | -5.3% |
| C3.ai, Inc. | 4.1x | -10.6% |
| Upland Software, Inc. | 1.9x | -13.8% |
| EverCommerce Inc. | 4.3x | -14.6% |
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 (72.9x, 47.0% NTM Growth), CWAN (8.6x, 41.7% NTM Growth) have been excluded to enhance visual meaning of this chart.
Enterprise Software Operating Metrics
Last updated Q3 2025
Median
Net Dollar Retention
108.0%
Median
ARR Growth
13.7%
Median
Payback Period
33 months
Top 10*
Net Dollar Retention
122.5%
Top 10*
ARR Growth
28.3%
Top 10*
Payback Period
21 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$25.9B
- Series B$70.5B
- Series C$150.6B
- Series D$112.2B
Average
Pre Money Valuation
- Series A$210.6B
- Series B$627.7B
- Series C$1,912.1B
- Series D$2,244.7B
Average
Post Money Valuation
- Series A$241.3B
- Series B$697.6B
- Series C$2,057.0B
- Series D$2,352.8B
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.