Clouded Judgement

The article analyzes growth durability in best-in-class cloud software companies, showing that elite businesses like Datadog and CrowdStrike have vastly outperformed IPO-era revenue expectations, suggesting markets are repricing for more sustainable long-term growth. The author examines current SaaS valuation multiples, operating metrics, and the Rule of 40 framework across the industry, while cautioning that overall software multiples are inflated and vulnerable to contraction.