Rule of 40 Calculator
Adds revenue growth and profit margin to see how the two balance.
Share sends a link that reopens these numbers. Copy details pastes the full breakdown as a list.
The formula
score = revenue growth % + profit margin %
Fast growth can make up for losses, and strong margins can make up for slow growth. Investors usually apply it to a full year, and the choice of margin changes the score.
What to watch out for
Use the same 12 months for both figures. Enter a loss as a negative margin.
Frequently Asked Questions
How do I calculate the Rule of 40?
Add yearly revenue growth to profit margin. 30% growth and a 15% margin scores 45%.
Can a loss-making company meet it?
Yes, if growth is high enough. 60% growth with a −10% margin scores 50%.
Is 40 a hard limit?
No. It is an investor rule of thumb, used mostly for established software companies. Falling short does not mean a business is unhealthy.