Welcome to the latest edition of Silverpeak’s Software Benchmark report.
This report provides analysis of valuation and operating metrics across public software companies in the US and Europe.
Key findings:
- Software valuations fell across all markets amid accelerating AI disruption, with the US hit hardest on both a QoQ and YoY basis. While the sell-off affected all sectors and regions, Q1 earnings will be a key test, likely beginning to differentiate companies with durable fundamentals from those facing longer-term existential challenges.
- The US decline reflects greater exposure to previously stretched software multiples and therefore proportionally increased sensitivity to AI disruption, with agentic pricing models damaging large vendors reliant on per-seat economics.
- Public valuations continue to correlate to the Rule of 40, with an increasing premium placed on profitability amid rising AI-related disruption risks. Among companies with comparable Rule of 40 scores, those with stronger profitability profiles traded at a material premium (5.6x) relative to higher-growth, lower-margin peers (3.3x).
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