Software Market Compression: Growth Deceleration vs. Absolute Value Creation
Public software companies experienced significant valuation compression in mid-2024 due to halved growth rates over 18-24 months, with top quartile growth now matching 2018 bottom quartile performance. Despite individual company slowdowns driven by the law of large numbers, the absolute software market continues expanding with $100B in new annual revenue, suggesting the selloff reflects mature company saturation rather than total market trouble.
Metrics in this report
100$B
total
last 12 months across public software companies
20years
median
since founding
17%
mean
last 12 months, public companies
100$B
total
2022 new bookings from pandemic acceleration
50%
median decline
last 18-24 months across 25th, 50th, 75th percentiles
-24%
recent
public software market compression event
100$B+
annual run rate
market heading toward milestone
124-592$B
range
revenue growth over period analyzed
35$B
total
largest mature public software company
150000+customers
total
public software company saturation example
3.5$B
annual target
to achieve 10% growth on $35B base
-15%
recent
public software market compression event
6x
standard valuation multiple
applied to revenue for market cap estimation
-36%
recent
public software market compression event
67%
decline
last 3 years vs. decade average
-11%
recent
public software market compression event