The Metrics Brothers (fka SaaS Talk) The Iconiq State of Software 2025 Report
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Oct 8, 2025 Explore the future of software with key insights from the latest industry benchmark report. Dive into AI segmentation, revealing over half of companies aren't utilizing AI. Discover how revenue multiples and growth trends vary by company size, plus the significance of the Rule of 40 in predicting success. Hear about trends in net revenue retention, CAC payback periods, and the importance of adopting new AI-focused metrics. Finally, get a glimpse into companies experiencing remarkable growth, while considering the evolving role of engineers.
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Rigorous But Elite Sample
- Iconiq's report is rigorous and transparent about definitions and methodology.
- The sample is elite (127 companies, many top-tier) so benchmarks reflect top-quartile performance, not the market average.
Rule Of 40 Outperforms Revenue
- Rule of 40 predicts valuation better than revenue alone and currently has the strongest correlation to EV/Revenue.
- In Iconiq's Q2 2025 sample, rule of 40 explains about 34% of the variance versus ~20% for revenue alone.
Growth Trumps Profit In Valuation
- Growth still matters more than profitability within Rule of 40, roughly two times more influential on valuation.
- When growth's relative impact becomes extreme, it can signal market froth or a bubble.