The Scalability Score

Companies we deem as scalable – derived from private equity formulas.

Inputs to our calculation

Why does this matter?

The Rule 40-the principle that a company's combined growth rate and profit margin should exceed 40%. The Rule of 40 is an important metric to help measure the trade-offs of balancing growth and profitability. We use this ratio to identify companies that are doing a good job of managing top-line revenue growth and profit margins.

The Rule-40 has typically been used by private equity firms to value SaaS technology companies. SaaS management teams are often driving towards either rapid growth or increased profitability, and the Rule of 40 has become a construct for framing the balance of these two phenomena.

Growth

The companies with the fastest revenue growth.

Momentum

Companies with upward short-term momentum that could produce short-term gains.

Scalability

Companies we deem as scalable – derived from private equity formulas.

Value

Comparatively cheap companies where you can get the most "bang for your buck".

Profitability

Companies with rock solid profitability, integral in future performance.

Safety

Companies directly correlated with the market, these generally provide low-risk.

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