[{"data":1,"prerenderedAt":-1},["ShallowReactive",2],{"glossary-rule-of-40::en":3,"gloss-cluster-rule-of-40::en":26,"gloss-next-rule-of-40::en":9},{"slug":4,"category":5,"name":6,"definition":7,"meta_desc":8,"faq":9,"schema_markup":9,"related":10},"rule-of-40","saas","Rule of 40","The Rule of 40 is a rule-of-thumb for judging whether a SaaS company balances growth and profitability well: its revenue growth rate plus its profit margin should add up to at least 40%. A company growing ARR 60% a year can afford to burn cash and run a -20% margin; one growing only 10% needs a 30% margin to pass. The metric became popular with growth-stage investors because it captures the core SaaS trade-off in a single number - you can buy growth with unprofitability, or bank profit while growing slowly, but you shouldn't do both badly. Margin is usually EBITDA or free-cash-flow margin, and growth is year-over-year recurring revenue. For founders, it's a sanity check rather than a target to game: hitting 40% by starving growth can be as unhealthy as missing it while scaling. Track it quarterly, and treat a persistent sub-40 score as a signal to fix either your growth engine or your unit economics.","The Rule of 40 says a SaaS company's revenue growth rate plus its profit margin should total at least 40% — fast growth buys the right to burn cash.",null,[11,14,17,20,23],{"slug":12,"name":13},"arr","Annual Recurring Revenue (ARR)",{"slug":15,"name":16},"churn","Churn",{"slug":18,"name":19},"gross-margin","Gross Margin",{"slug":21,"name":22},"net-revenue-retention","Net Revenue Retention (NRR)",{"slug":24,"name":25},"saas-magic-number","SaaS Magic Number",[27,31,35,38,41,44,45,49,52,55,58,61],{"slug":28,"category":5,"name":29,"updated_at":30},"activation","Activation","2026-08-24T02:46:36+00:00",{"slug":32,"category":5,"name":33,"updated_at":34},"aha-moment","Aha Moment","2026-08-24T02:46:37+00:00",{"slug":36,"category":5,"name":37,"updated_at":34},"annual-contract-value","Annual Contract Value (ACV)",{"slug":39,"category":5,"name":40,"updated_at":30},"api-first","API-First",{"slug":42,"category":5,"name":43,"updated_at":30},"arpa","Average Revenue Per Account (ARPA)",{"slug":12,"category":5,"name":13,"updated_at":30},{"slug":46,"category":5,"name":47,"updated_at":48},"auto-renewal-clause","Auto-Renewal Clause","2026-08-24T02:46:38+00:00",{"slug":50,"category":5,"name":51,"updated_at":48},"build-vs-buy","Build vs. Buy",{"slug":53,"category":5,"name":54,"updated_at":34},"burn-multiple","Burn Multiple",{"slug":56,"category":5,"name":57,"updated_at":48},"burn-rate","Burn Rate",{"slug":59,"category":5,"name":60,"updated_at":30},"cac","Customer Acquisition Cost (CAC)",{"slug":62,"category":5,"name":63,"updated_at":30},"cdn","Content Delivery Network (CDN)"]