Revenue growth (x) vs. free-cash-flow margin (y). Companies above the dashed line clear the Rule of 40 — the classic test that growth + profitability ≥ 40. The selected company is highlighted.
Latest full-year revenue, log scale. Selected company highlighted.
The single most-scrutinized line in an S-1. Public-market investors pay up for durable, high growth; decelerating growth pre-IPO is a red flag.
Structural profitability of the product. 70–85% is typical for software; low-margin businesses must win on scale.
Profitability after opex / after everything. Many IPOs are unprofitable on a GAAP basis — the question is the path to profit.
Cash generated after capex, as a share of revenue. Cash is harder to engineer than accounting earnings, so investors trust it.
Growth % + FCF margin %. ≥ 40 signals a healthy balance between growing fast and burning responsibly. The headline SaaS health check.
How much is reinvested in product. High R&D can justify losses today if it compounds into moat tomorrow.
Balance-sheet resilience and runway — how long the company can fund losses, and how leveraged it already is.