Rule of 40
The rule of 40 is a popular metric for measuring the quality of SaaS companies. It measures growth and profitability. Companies are considered good if this sum is above 40.
It is the sum of the year over year sales growth and profit margin.
Rule of 40 = YoY sales growth + profit margin
It is the sum of the year over year sales growth and profit margin.
Rule of 40 = YoY sales growth + profit margin