Software Index
State of the Market
The software sector suffered a historic 13% crash in early February as the launch of agentic tools like Anthropic’s "Claude Cowork" forced a reassessment of traditional per-seat pricing models. Microsoft exemplified this volatility—despite reporting record Q2 revenue of $81.3 billion (up 17%) and 39% Azure growth, its stock fell over 15% year to date as investors weighed the sustainability of the SaaS model. This shift signals a broader industry pivot toward intent-driven systems. However, future growth requires unprecedented capital: aggregate hyperscaler CapEx is projected to exceed $650 billion in 2026. While Microsoft’s $625 billion contracted revenue signals high demand, skepticism persists because 45% of that backlog is concentrated in OpenAI, a partner that has yet to demonstrate sustained profitability. The per-seat model is increasingly seen as vulnerable to an "AI earthquake" that favors economics based on consumption or performance.
In public equities, February kicked off with markets reaching new heights, as the S&P 500 and the Nasdaq both rose to record levels on solid corporate earnings. The Dow's gains also suggested some broadening beyond tech. However, this upward drift stalled, as tentative optimism gave way to concerns about apparent labor strains, and indices receded from their new highs.
The recent jobs report highlighted segmented gains, with nonfarm payrolls adding 130,000, doubling forecasts of about 70,000. Private sector additions carried the weight, led by health care, social assistance, and construction, while manufacturing stayed flat and federal roles declined. Unemployment dipped to 4.3%, but sharp 2025 revisions, which slashed 400,000 jobs from the record, exposed a deeper stagnation than was initially reported.
This labor market volatility is increasingly underpinned by structural shifts; namely, the accelerating adoption of AI. A recent Stanford study revealed 16% fewer entry-level hires in exposed fields since late 2022, disproportionately affecting young workers. Firms report productivity gains but net job cuts, often pre-adoption. This softening, occurring amid solid growth, signals a shift favoring capital over labor, as AI 'ownership' by model providers transfers income share from workers to capital owners, risking wider inequality if AI replaces rather than augments roles.
Inflationary pressures cooled in January, with the headline Consumer Price Index (CPI) decelerating to 2.4% year over year, down from 2.7% in December. This reading was slightly below the anticipated 2.5%, largely aided by a 1.5% monthly drop in energy prices and a 3.2% decline in gasoline costs. However, core inflation remained sticky at 2.5%, as shelter costs continued to rise at a 3.0% annual rate. Simultaneously, the latest Producer Price Index (PPI, December) held firm at a 3.0% annual rate, indicating that while consumer prices are cooling, input costs for firms remain elevated, complicating the path to the Federal Reserve's 2.0% target. On January 30, President Trump nominated Kevin Warsh as the incoming Chair, poised to take over from Jerome Powell in May 2026, which will usher in a period of higher uncertainty in rate decisions.
GDP provides a solid base: Q3 2025 at 4.4% annualized, with Q4 estimates at 3.7%. Quarterly 2026 forecasts moderate to 2.2%, 2.0%, 2.1%, and 2.2% for each quarter respectively. The IMF's upward revision to 3.3% global growth for 2026 highlights U.S. demand's role. For 2026's balance, watch fiscal boosts from the ‘One Big Beautiful Bill’ tax refunds and reciprocal trade agreements with partners like Taiwan, India, and Bangladesh, offset by 'jobless expansion' risks. Monitor February jobs and FOMC minutes for Fed easing signals amid sticky core inflation.
Median
NTM Rev Multiple
3.7x
Top 10*
NTM Rev Multiple
11.3x
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. | 59.8x | 343,283 | 3,896 | 47.4% | 47% | 81% | 22% | 30% |
| Cloudflare, Inc. | 24.0x | 61,581 | 2,013 | 27.5% | 28% | 75% | -10% | 18% |
| CrowdStrike Holdings, Inc. | 19.3x | 107,337 | 4,565 | 22.1% | 22% | 74% | -6% | 31% |
| Shopify Inc. | 12.4x | 164,931 | 10,696 | 24.8% | 30% | 49% | 16% | 11% |
| Snowflake Inc. | 11.7x | 64,224 | 4,387 | 24.7% | 28% | 67% | -31% | 29% |
| Datadog, Inc. | 10.9x | 42,488 | 3,212 | 21.6% | 27% | 80% | -1% | 26% |
| MongoDB, Inc. | 10.1x | 27,984 | 2,317 | 20.0% | 21% | 72% | -7% | 15% |
| JFrog Ltd. | 9.9x | 5,844 | 503 | 17.0% | 23% | 76% | -18% | 35% |
| Figma, Inc. | 9.2x | 11,329 | 969 | 27.1% | 0% | 85% | -108% | 0% |
| Microsoft Corporation | 9.2x | 3,228,990 | 305,453 | 15.1% | 17% | 69% | 47% | 18% |
| Zscaler, Inc. | 8.8x | 30,411 | 2,833 | 21.6% | 23% | 77% | -4% | 34% |
| Clearwater Analytics Holdings, Inc. | 8.6x | 7,792 | 640 | 41.7% | 51% | 69% | 3% | 24% |
| Samsara Inc. | 8.3x | 15,113 | 1,521 | 20.3% | 29% | 77% | -5% | 19% |
| The Descartes Systems Group Inc. | 7.9x | 6,166 | 704 | 11.0% | 11% | 77% | 30% | 31% |
| Oracle Corporation | 7.8x | 585,330 | 61,016 | 23.8% | 11% | 69% | 32% | -13% |
| Confluent, Inc. | 7.7x | 10,002 | 1,113 | 16.7% | 22% | 74% | -35% | 18% |
| Manhattan Associates, Inc. | 7.7x | 8,765 | 1,081 | 5.9% | 4% | 56% | 26% | 30% |
| ServiceNow, Inc. | 7.2x | 114,740 | 13,278 | 20.4% | 21% | 78% | 15% | 37% |
| Netskope, Inc. | 6.7x | 5,502 | 661 | 24.2% | 0% | 66% | -88% | 0% |
| ServiceTitan, Inc. | 6.6x | 7,001 | 916 | 15.5% | 26% | 69% | -28% | 14% |
| DigitalOcean Holdings, Inc. | 6.3x | 6,433 | 864 | 17.8% | 14% | 61% | 18% | 23% |
| Qualys, Inc. | 5.8x | 4,121 | 653 | 8.0% | 10% | 82% | 33% | 36% |
| OneStream, Inc. | 5.8x | 3,929 | 571 | 18.4% | 24% | 68% | -24% | 24% |
| Dayforce, Inc. | 5.6x | 11,685 | 1,893 | 11.3% | 12% | 51% | -1% | 11% |
| Dynatrace, Inc. | 4.8x | 10,256 | 1,853 | 15.0% | 19% | 82% | 12% | 27% |
| International Business Machines Corporation | 4.7x | 336,966 | 67,535 | 5.4% | 8% | 58% | 17% | 21% |
| Waystar Holding Corp. | 4.7x | 5,916 | 1,040 | 20.9% | 15% | 68% | 25% | 30% |
| Adobe Inc. | 4.6x | 120,438 | 23,769 | 9.5% | 11% | 89% | 37% | 38% |
| Atlassian Corporation | 4.5x | 29,542 | 5,460 | 20.8% | 20% | 83% | -3% | 30% |
| Q2 Holdings, Inc. | 4.5x | 3,800 | 770 | 10.7% | 14% | 53% | 3% | 22% |
| Salesforce, Inc. | 4.4x | 199,228 | 40,317 | 11.6% | 8% | 78% | 22% | 36% |
| GitLab Inc. | 4.4x | 4,731 | 906 | 18.9% | 27% | 88% | -9% | 32% |
| Workiva Inc. | 4.3x | 4,259 | 846 | 16.5% | 20% | 78% | -7% | 17% |
| EverCommerce Inc. | 4.2x | 2,598 | 718 | -14.6% | 22% | 68% | 9% | 12% |
| Paylocity Holding Corporation | 4.2x | 7,311 | 1,640 | 6.8% | 13% | 69% | 19% | 21% |
| Okta, Inc. | 4.2x | 12,932 | 2,840 | 9.1% | 12% | 77% | 4% | 34% |
| Workday, Inc. | 4.1x | 43,141 | 9,231 | 12.8% | 13% | 76% | 9% | 30% |
| Klaviyo, Inc. | 4.1x | 5,839 | 1,154 | 22.5% | 33% | 75% | -8% | 18% |
| SPS Commerce, Inc. | 4.1x | 3,242 | 730 | 8.8% | 19% | 68% | 15% | 17% |
| Pegasystems Inc. | 4.0x | 7,141 | 1,732 | 4.2% | 17% | 76% | 17% | 26% |
| BlackLine, Inc. | 3.9x | 2,919 | 687 | 8.4% | 7% | 75% | 5% | 21% |
| Zoom Communications, Inc. | 3.9x | 19,376 | 4,806 | 3.5% | 4% | 77% | 23% | 42% |
| HubSpot, Inc. | 3.9x | 13,454 | 2,988 | 16.6% | 19% | 84% | -1% | 20% |
| Dropbox, Inc. | 3.6x | 8,922 | 2,528 | -1.4% | 0% | 81% | 26% | 35% |
| SentinelOne, Inc. | 3.6x | 4,112 | 956 | 20.1% | 24% | 75% | -32% | 26% |
| Elastic N.V. | 3.4x | 6,142 | 1,609 | 13.6% | 17% | 76% | -2% | 28% |
| Box, Inc. | 3.4x | 4,152 | 1,151 | 7.7% | 7% | 79% | 6% | 32% |
| Constellation Software Inc. | 3.3x | 42,621 | 11,149 | 16.3% | 15% | 37% | 16% | 20% |
| Paycom Software, Inc. | 3.3x | 7,108 | 2,001 | 9.1% | 10% | 87% | 22% | 19% |
| Twilio Inc. | 3.2x | 16,899 | 4,896 | 9.0% | 13% | 49% | 3% | 16% |
| ZoomInfo Technologies Inc. | 3.1x | 3,930 | 1,240 | 0.8% | 1% | 87% | 20% | 24% |
| Progress Software Corporation | 3.1x | 3,058 | 978 | 1.6% | 30% | 85% | 18% | 27% |
| Via Transportation, Inc. | 3.1x | 1,546 | 407 | 23.9% | 0% | 40% | -17% | 0% |
| monday.com Ltd. | 3.0x | 4,296 | 1,166 | 21.5% | 29% | 89% | 0% | 22% |
| C3.ai, Inc. | 3.0x | 936 | 353 | -11.0% | 2% | 52% | -117% | 8% |
| DocuSign, Inc. | 2.9x | 9,833 | 3,159 | 6.6% | 8% | 80% | 9% | 37% |
| Navan, Inc. | 2.9x | 2,300 | 656 | 21.6% | 0% | 71% | -21% | 0% |
| Appian Corporation | 2.8x | 2,175 | 691 | 12.0% | 16% | 76% | 2% | 14% |
| Asana, Inc. | 2.6x | 2,217 | 774 | 8.5% | 9% | 89% | -28% | 19% |
| Jamf Holding Corp. | 2.6x | 1,992 | 691 | 9.9% | 12% | 79% | -2% | 30% |
| Tenable Holdings, Inc. | 2.6x | 2,667 | 975 | 7.0% | 11% | 78% | 2% | 29% |
| Amplitude, Inc. | 2.6x | 962 | 330 | 14.4% | 13% | 74% | -34% | 15% |
| Freshworks Inc. | 2.5x | 2,266 | 811 | 12.8% | 18% | 85% | -5% | 31% |
| Braze, Inc. | 2.5x | 2,037 | 693 | 19.1% | 23% | 68% | -18% | 24% |
| BILL Holdings, Inc. | 2.4x | 3,931 | 1,500 | 10.6% | 12% | 84% | -6% | 16% |
| eGain Corporation | 2.3x | 210 | 90 | 2.3% | 0% | 72% | 7% | 15% |
| Open Text Corporation | 2.3x | 11,861 | 5,188 | 0.5% | -8% | 76% | 20% | 22% |
| Asure Software, Inc. | 2.1x | 325 | 132 | 18.6% | 15% | 67% | -10% | -6% |
| DoubleVerify Holdings, Inc. | 2.1x | 1,646 | 733 | 9.4% | 15% | 82% | 11% | 19% |
| Yext, Inc. | 2.0x | 920 | 448 | 3.4% | 9% | 76% | 5% | 19% |
| Docebo Inc. | 1.9x | 499 | 237 | 10.2% | 13% | 81% | 11% | 4% |
| Upland Software, Inc. | 1.9x | 380 | 236 | -13.8% | -16% | 73% | 3% | 18% |
| PagerDuty, Inc. | 1.7x | 850 | 489 | 2.4% | 7% | 84% | -2% | 26% |
| Enghouse Systems Limited | 1.5x | 564 | 356 | 4.8% | -1% | 64% | 18% | 21% |
| VTEX | 1.4x | 359 | 234 | 9.8% | 4% | 76% | 7% | 15% |
| RingCentral, Inc. | 1.4x | 3,568 | 2,486 | 4.4% | 5% | 71% | 4% | 27% |
| Sprinklr, Inc. | 1.3x | 1,142 | 839 | 4.1% | 6% | 69% | 6% | 16% |
| Five9, Inc. | 1.2x | 1,503 | 1,127 | 8.1% | 12% | 56% | 4% | 20% |
| ON24, Inc. | 1.2x | 165 | 141 | -5.3% | -6% | 75% | -26% | 22% |
| Kaltura, Inc. | 1.2x | 218 | 181 | -1.1% | 2% | 70% | -3% | 12% |
| Rackspace Technology, Inc. | 1.2x | 3,320 | 2,689 | 1.3% | -3% | 20% | -3% | 13% |
| Domo, Inc. | 1.1x | 340 | 318 | 1.4% | 0% | 74% | -13% | 24% |
| Sprout Social, Inc. | 1.0x | 504 | 444 | 11.0% | 13% | 78% | -10% | 23% |
| Riskified Ltd. | 1.0x | 356 | 339 | 7.4% | 7% | 50% | -12% | 14% |
| Commerce.com, Inc. | 0.8x | 277 | 340 | 4.1% | 3% | 79% | -1% | 13% |
| Expensify, Inc. | 0.6x | 79 | 144 | 0.8% | 5% | 51% | -9% | 22% |
| Top 10 Average | 17.6x | 405,799 | 33,801 | 24.7% | 24% | 73% | -10% | 21% |
| Top 10 Median | 11.3x | 62,902 | 3,554 | 23.4% | 25% | 75% | -6% | 22% |
| Overall Average | 5.3x | 68,270 | 7,566 | 12.0% | 13% | 72% | -1% | 21% |
| Overall Median | 3.7x | 4,513 | 976 | 10.8% | 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%)
8.0x
|
|
Multiple
|
Growth
|
|---|---|---|
| Palantir Technologies Inc. | 59.8x | 47.4% |
| Clearwater Analytics Holdings, Inc. | 8.6x | 41.7% |
| Cloudflare, Inc. | 24.0x | 27.5% |
| Figma, Inc. | 9.2x | 27.1% |
| Shopify Inc. | 12.4x | 24.8% |
| Snowflake Inc. | 11.7x | 24.7% |
| Netskope, Inc. | 6.7x | 24.2% |
| Via Transportation, Inc. | 3.1x | 23.9% |
| Oracle Corporation | 7.8x | 23.8% |
| Klaviyo, Inc. | 4.1x | 22.5% |
| CrowdStrike Holdings, Inc. | 19.3x | 22.1% |
| Zscaler, Inc. | 8.8x | 21.6% |
| Datadog, Inc. | 10.9x | 21.6% |
| Navan, Inc. | 2.9x | 21.6% |
| monday.com Ltd. | 3.0x | 21.5% |
| Waystar Holding Corp. | 4.7x | 20.9% |
| Atlassian Corporation | 4.5x | 20.8% |
| ServiceNow, Inc. | 7.2x | 20.4% |
| Samsara Inc. | 8.3x | 20.3% |
| SentinelOne, Inc. | 3.6x | 20.1% |
EV/NTM Revenue Multiple
Average Growth (10%-20%)
4.4x
|
|
Multiple
|
Growth
|
|---|---|---|
| MongoDB, Inc. | 10.1x | 20.0% |
| Braze, Inc. | 2.5x | 19.1% |
| GitLab Inc. | 4.4x | 18.9% |
| Asure Software, Inc. | 2.1x | 18.6% |
| OneStream, Inc. | 5.8x | 18.4% |
| DigitalOcean Holdings, Inc. | 6.3x | 17.8% |
| JFrog Ltd. | 9.9x | 17.0% |
| Confluent, Inc. | 7.7x | 16.7% |
| HubSpot, Inc. | 3.9x | 16.6% |
| Workiva Inc. | 4.3x | 16.5% |
| Constellation Software Inc. | 3.3x | 16.3% |
| ServiceTitan, Inc. | 6.6x | 15.5% |
| Microsoft Corporation | 9.2x | 15.1% |
| Dynatrace, Inc. | 4.8x | 15.0% |
| Amplitude, Inc. | 2.6x | 14.4% |
| Elastic N.V. | 3.4x | 13.6% |
| Workday, Inc. | 4.1x | 12.8% |
| Freshworks Inc. | 2.5x | 12.8% |
| Appian Corporation | 2.8x | 12.0% |
| Salesforce, Inc. | 4.4x | 11.6% |
| Dayforce, Inc. | 5.6x | 11.3% |
| Sprout Social, Inc. | 1.0x | 11.0% |
| The Descartes Systems Group Inc. | 7.9x | 11.0% |
| Q2 Holdings, Inc. | 4.5x | 10.7% |
| BILL Holdings, Inc. | 2.4x | 10.6% |
| Docebo Inc. | 1.9x | 10.2% |
EV/NTM Revenue Multiple
Low Growth (< 10%)
2.6x
|
|
Multiple
|
Growth
|
|---|---|---|
| Jamf Holding Corp. | 2.6x | 9.9% |
| VTEX | 1.4x | 9.8% |
| Adobe Inc. | 4.6x | 9.5% |
| DoubleVerify Holdings, Inc. | 2.1x | 9.4% |
| Okta, Inc. | 4.2x | 9.1% |
| Paycom Software, Inc. | 3.3x | 9.1% |
| Twilio Inc. | 3.2x | 9.0% |
| SPS Commerce, Inc. | 4.1x | 8.8% |
| Asana, Inc. | 2.6x | 8.5% |
| BlackLine, Inc. | 3.9x | 8.4% |
| Five9, Inc. | 1.2x | 8.1% |
| Qualys, Inc. | 5.8x | 8.0% |
| Box, Inc. | 3.4x | 7.7% |
| Riskified Ltd. | 1.0x | 7.4% |
| Tenable Holdings, Inc. | 2.6x | 7.0% |
| Paylocity Holding Corporation | 4.2x | 6.8% |
| DocuSign, Inc. | 2.9x | 6.6% |
| Manhattan Associates, Inc. | 7.7x | 5.9% |
| International Business Machines Corporation | 4.7x | 5.4% |
| Enghouse Systems Limited | 1.5x | 4.8% |
| RingCentral, Inc. | 1.4x | 4.4% |
| Pegasystems Inc. | 4.0x | 4.2% |
| Sprinklr, Inc. | 1.3x | 4.1% |
| Commerce.com, Inc. | 0.8x | 4.1% |
| Zoom Communications, Inc. | 3.9x | 3.5% |
| Yext, Inc. | 2.0x | 3.4% |
| PagerDuty, Inc. | 1.7x | 2.4% |
| eGain Corporation | 2.3x | 2.3% |
| Progress Software Corporation | 3.1x | 1.6% |
| Domo, Inc. | 1.1x | 1.4% |
| Rackspace Technology, Inc. | 1.2x | 1.3% |
| ZoomInfo Technologies Inc. | 3.1x | 0.8% |
| Expensify, Inc. | 0.6x | 0.8% |
| Open Text Corporation | 2.3x | 0.5% |
| Kaltura, Inc. | 1.2x | -1.1% |
| Dropbox, Inc. | 3.6x | -1.4% |
| ON24, Inc. | 1.2x | -5.3% |
| C3.ai, Inc. | 3.0x | -11.0% |
| Upland Software, Inc. | 1.9x | -13.8% |
| EverCommerce Inc. | 4.2x | -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 (59.8x, 47.4% 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 Q4 2025
Median
Net Dollar Retention
108.0%
Median
ARR Growth
14.1%
Median
Payback Period
32 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$23.0B
- Series B$69.0B
- Series C$149.0B
- Series D$165.0B
Average
Pre Money Valuation
- Series A$258.0B
- Series B$611.0B
- Series C$2,344.0B
- Series D$2,399.0B
Average
Post Money Valuation
- Series A$286.0B
- Series B$680.0B
- Series C$2,500.0B
- Series D$2,569.0B
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.