hard · Private Equity & LBOs
A high-growth SaaS company has ARR growth of 35% and an EBITDA margin of 10%.
If the company's CAC Payback period is 14 months, does it meet the 'Rule of 40' threshold?
- No, because the CAC Payback period exceeds 12 months.
- No, because SaaS companies must have at least 40% growth regardless of margin.
- Yes, because its sum of growth and margin is 45%.
- Yes, because the ARR growth alone is nearly 40%.
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