Rule of 40 Is Half Dead: Growth Is All That Matters, Margins Above 25% Don’t Help, and Category Beats Both. The Latest From Kroll

A new software sector update from Kroll suggests that traditional valuation metrics like the Rule of 40 are losing their influence. Per SaaStr, the data shows that growth is now the primary driver of valuation, while profit margins above twenty-five percent provide little to no additional benefit. The report also highlights a massive disparity in deal values, noting that a single sixty billion dollar acquisition of Cursor by SpaceX accounted for half of the annualized deal value in the first half of twenty twenty-six. This trend indicates that strategic buyers are paying a significant premium for AI capabilities and proprietary data compared to what the public market currently supports.

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