Growth + Profitability · Updated June 2026
Rule of 40 Benchmarks
YoY revenue growth % + FCF margin % by ARR band and growth category. All combinations covered — from hyper-growth seed companies to mature public SaaS.
Revenue Growth Benchmarks — SEC EDGAR, by industry segment
TTM year-over-year revenue growth for public SaaS/software companies, computed directly from SEC filings. Revenue growth is one of the two components of the Rule of 40 score below.
| Industry segment | Median | Cohort | Vintage |
|---|---|---|---|
| Dev Tools / Infrastructure | 22.4% | n=10 | TTM Q4 2025 |
| General B2B SaaS | 13.4% | n=8 | TTM Q4 2025 |
| Security / Compliance | 19.5% | n=9 | TTM Q4 2025 |
| MarTech / Sales Tech | 12.3% | n=9 | TTM Q4 2025 |
| Vertical SaaS | 15.6% | n=10 | TTM Q4 2025 |
| Fintech / Payments | 25.3% | n=8 | TTM Q4 2025 |
| HR / Workforce | 11% | n=6 | TTM Q4 2025 |
| Healthcare / MedTech | 2.6% | n=8 | TTM Q4 2025 |
All segments combined median: 15.6% (n=68)
Primary source: SEC EDGAR companyfacts API (data.sec.gov), us-gaap XBRL facts, computed TTM per-company and aggregated as a segment median. See data/benchmarks_public.json for the full derivation (method, company sample, period) behind every number on this page.
Method: (Revenue_TTM_current - Revenue_TTM_year_ago) / Revenue_TTM_year_ago x 100, cohort median. Period: TTM ending 2025-12-31. Companies used: 68 (SEC CIKs, see derivation.cik_sample in benchmarks_public.json). Flags: G1, G3.
growthCalculate your Rule of 40 score
YoY Revenue Growth % + FCF Margin %. Negative FCF margin reduces the score.
Your Rule of 40 score
Rule of 40-proxy — SEC EDGAR, by industry segment (public companies)
Rule-of-40-proxy = TTM Revenue Growth % + (FCF margin % where OCF/CapEx tags are reported, else Operating margin %). Segmented by industry, not ARR band — public filers report revenue, not ARR.
| Industry segment | Median | Cohort | Vintage |
|---|---|---|---|
| Dev Tools / Infrastructure | 39.6 | n=10 | TTM Q4 2025 |
| General B2B SaaS | 44.2 | n=8 | TTM Q4 2025 |
| Security / Compliance | 40.6 | n=9 | TTM Q4 2025 |
| MarTech / Sales Tech | 33.4 | n=9 | TTM Q4 2025 |
| Vertical SaaS | 30.4 | n=10 | TTM Q4 2025 |
| Fintech / Payments | 29.5 | n=8 | TTM Q4 2025 |
| HR / Workforce | 34.9 | n=5 | TTM Q4 2025 |
| Healthcare / MedTech | 18.0 | n=8 | TTM Q4 2025 |
All segments combined median: 35.0 (n=67)
Primary source: SEC EDGAR companyfacts API (data.sec.gov), us-gaap XBRL facts, computed TTM per-company and aggregated as a segment median. See data/benchmarks_public.json for the full derivation (method, company sample, period) behind every number on this page.
Method: TTM YoY Revenue Growth % + (FCF margin % where OCF/CapEx tags available, else Operating margin %), cohort median. Period: TTM ending 2025-12-31. Companies used: 67 (SEC CIKs, see derivation.cik_sample in benchmarks_public.json). Flags: G1, G3.
Definition traps
G1 — Revenue tag varies by issuer
Public companies report revenue under different us-gaap XBRL tags depending on when they adopted ASC 606:
RevenueFromContractWithCustomerExcludingAssessedTax or ...IncludingAssessedTax (post-2018), or the older Revenues tag (pre-ASC 606, or issuers who never switched). This pipeline checks all three tags and uses whichever has data for the period — flagged here whenever a segment's cohort includes at least one company using a fallback tag.G3 — TTM sometimes requires a Q4 plug
10-Q filings report cumulative year-to-date figures, not always a discrete quarter. Where a discrete Q4 fact is not filed directly, this pipeline derives it as Q4 = FY (10-K total) − sum(Q1+Q2+Q3, 10-Q). Every company/period where this plug was used is logged explicitly — never silently assumed.
Private company context (attributed, not canonical)
ARR-banded Rule of 40 (Bessemer / McKinsey / BVP Nasdaq Emerging Cloud Index, attributed)
Rule of 40 — all ARR bands and growth categories
| ARR Band | Growth Category | Median Score | Top Quartile | Typical Growth % | Typical FCF Margin |
|---|---|---|---|---|---|
| Under $10M ARR — R40 not primary metric at this stage; growth dominates | |||||
| Under $10M | Hyper-growth (>80% YoY) | 52 | 78 | +110% | −58% |
| Under $10M | Fast growth (40–80% YoY) | 28 | 48 | +55% | −27% |
| Under $10M | Solid growth (20–40% YoY) | 10 | 25 | +28% | −18% |
| Under $10M | Mature growth (<20% YoY) | 2 | 15 | +14% | −12% |
| $10M–$50M ARR — R40 becomes a meaningful investor signal | |||||
| $10M–$50M | Hyper-growth (>80% YoY) | 55 | 82 | +95% | −40% |
| $10M–$50M | Fast growth (40–80% YoY) | 40 | 62 | +58% | −18% |
| $10M–$50M | Solid growth (20–40% YoY) | 22 | 38 | +28% | −6% |
| $10M–$50M | Mature growth (<20% YoY) | 12 | 28 | +14% | −2% |
| $50M–$200M ARR — operating leverage begins to show; FCF margin improves | |||||
| $50M–$200M | Hyper-growth (>80% YoY) | 58 | 88 | +85% | −27% |
| $50M–$200M | Fast growth (40–80% YoY) | 45 | 68 | +52% | −7% |
| $50M–$200M | Solid growth (20–40% YoY) | 32 | 50 | +28% | +4% |
| $50M–$200M | Mature growth (<20% YoY) | 18 | 35 | +15% | +3% |
| $200M+ ARR — mature companies; FCF margin contributes meaningfully to score | |||||
| $200M+ | Hyper-growth (>80% YoY) | 68 | 96 | +82% | −14% |
| $200M+ | Fast growth (40–80% YoY) | 48 | 72 | +45% | +3% |
| $200M+ | Solid growth (20–40% YoY) | 42 | 65 | +28% | +14% |
| $200M+ | Mature growth (<20% YoY) | 30 | 50 | +14% | +16% |
Sources: Bessemer State of the Cloud 2024, McKinsey SaaS benchmarking 2024, BVP Nasdaq Emerging Cloud Index public filings. Rule of 40 = YoY Revenue Growth % + FCF Margin %.
Rule of 40 at different scale points
Early-stage companies (under $10M ARR) should not be judged on Rule of 40 — burning capital to grow fast is expected. The metric becomes meaningful at $10M–$50M ARR where growth curves are under investor scrutiny. McKinsey research shows Rule of 40 companies trade at roughly 2× the revenue multiple of peers below 40. Above $200M ARR, FCF margin contributes meaningfully to the score as operating leverage compounds — the best large-cap SaaS companies achieve scores of 50–70+ on the combination of solid growth and double-digit FCF margins.Sponsored placement
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