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Rule of 40 Calculator

Compute Rule of 40 score (growth rate + FCF margin). Wall Street's filter for SaaS health.

ARR growth rate YoY (%) ?

Free cash flow margin (%) ?

Rule of 40 — Enter values to compute

Formula: ARR Growth (%) + FCF Margin (%)

Benchmarks

Rule of 40 score (higher is better)

Top 10% (p90)

Top quartile (p75)

Median (p50)

Bottom quartile (p25)

Magic Number — Compute SaaS Magic Number — quarterly sales efficiency. >1.0 invest more, <0.5 cut spend.
SaaS Quick Ratio — Wins divided by losses. >4 = healthy growth quality. <1 = you're losing more than winning.
LTV:CAC Ratio — Compute the LTV-to-CAC ratio. The single most-cited SaaS unit-economics test.