Thread by @JonahLupton

Most software investors are familiar with "Rule of 40" which was popularized by @bfeld

It signals the health, viability & scalability of a software business.

Rule of 40 = revenue growth + profit margin

What publicly traded software companies have the highest number?

Here are some I track:
$DLO = 165%
$BILL = 110%
$APP = 110%
$SNOW = 102%
$HUBS = 82%
$ZI = 81%
$DDOG = 79%
$CRWD = 74%
$SHOP = 74%
$ADBE = 60%
$ZS = 56%
$INTU = 54%
$MSFT = 52%
$NOW = 51%
$PAYC = 49%
$NET = 48%
$OKTA = 46%
$DOCN = 45%
$CRM = 42%
$TEAM = 41%
$ADSK = 40%
$S = 38%

Several of these companies increased their revenue growth in 2021 through acquisition so the numbers might be slightly misleading however that's not the case with $DLO. I think $APP $HUBS $BILL and $INTU might have done acquisitions in 2021 that impacted the numbers.

Here are a few more...
$PLTR = 63%
$TWLO = 56%
$WDAY = 38%
$VEEV = 59%
$XM = 41%
$TEAM = 41%
$DOCU = 63%
$PATH = 50%
$BIGC = 32%

I’m using 2021 full year estimates so it’s possible the “rule of 40” is different if you based it solely on the most recent quarterly numbers but I wanted to keep it consistent.