To The Moon

Hi Tigers, the term “Rule of 40” was originally coined in 2015 by venture capitalists Brad Feld and Fred Wilson, referring to their view that venture-backed companies should strive to achieve a growth rate plus profitability margin of 40% or greater. The Rule of 40 Score Benchmark chart ranks SaaS companies with strong financial performance (Rule of 40 > 40%). The Rule of 40 combines revenue growth and EBITDA margin. A score above 40% signals good balance between growth and profitability. $AppLovin Corporation(APP)$ leads with 73%, followed by $Microsoft(MSFT)$ (68%) and $Oracle(ORCL)$ (66%).

Risk Disclaimer: The information in this article is compiled from public sources. Historical performance and analyst forecasts do not constitute direct investment advice.

The following is a compilation of key drivers behind these 10 companies, based on publicly available information. This is for discussion purposes only.

1. $AppLovin Corporation(APP)$

• Core Business & Latest Business Developments: AppLovin is a global leader in mobile advertising technology with core technologies including the Axon machine learning recommendation engine, the App Graph data management layer, and an elastic cloud infrastructure. On May 7, 2025, AppLovin entered into a definitive agreement to sell its mobile gaming business to Tripledot Studios for total consideration of $400 million in cash and 20% of Tripledot's common stock, enabling it to focus more on its advertising technology business. Its AI-powered advertising engine, Axon 2, has performed exceptionally well.

• Financial Highlights: In Q1 2025, AppLovin reported net income of $576 million, a year-over-year growth of 145.50%. Adjusted EBITDA reached $1.005 billion, and EPS was $1.67. Revenue grew 40% year-over-year to $1.484 billion, exceeding market expectations.

• Analyst Target Price Expectations: Morgan Stanley maintained an "overweight" rating and lifted its target price from $350 to $420. UBS maintained a "buy" rating and raised its target price from $450 to $475. Some analysts set even higher target prices, with some reaching $530.

2. $Microsoft(MSFT)$

• Core Business & Latest Business Developments: Microsoft is a global technology leader with a diverse portfolio, including operating systems, office software, cloud computing, and artificial intelligence. Its Azure cloud services and AI technologies are key drivers of growth. On June 12, 2025, Microsoft announced the general availability of Azure OpenAI Service, enabling developers to build intelligent applications.

• Financial Highlights: In Q2 2025, Microsoft reported net income of $24.108 billion, a 10% year-over-year increase. Adjusted EPS was $3.23. Revenue grew 12% year-over-year to $69.632 billion.

• Analyst Target Price Expectations: BMO Capital maintains a "Buy" rating with a target price of $550. Piper Sandler maintains a "Buy" rating with a target price of $600. Oppenheimer upgraded its rating to "Buy" with a target price of $600. Morgan Stanley maintains a "Buy" rating with a target price of $530. Wedbush maintains a "Buy" rating with a target price of $600.

3. $Oracle(ORCL)$

• Core Business & Latest Business Developments: Oracle is a leading enterprise software company specializing in databases, cloud computing, and enterprise software solutions.

• Financial Highlights: In Q4 2025, Oracle reported GAAP net income of $3.4 billion and non-GAAP net income of $4.9 billion. GAAP EPS was $1.19, while non-GAAP EPS was $1.70. For the full FY2025, total revenue was $57.4 billion, up 8% year-over-year. GAAP EPS was $4.34, while non-GAAP EPS was $6.03. The company's EBITDA for FY2025 was $23.49 billion.

• Analyst Target Price Expectations: Based on the one-year price targets offered by 32 analysts, the average target price for Oracle Corp (ORCL) is $229.93 with a high target of $245 and a low target of $210.

4. $Fair Isaac(FICO)$

• Core Business & Latest Business Developments: FICO is a leader in analytics and digital decisioning technologies, primarily engaged in the software application industry. Its solutions are categorized into two main segments: Scores and Software.

• Financial Highlights: In Q2 FY25 (ended Mar 31), FICO reported net income of $162.6 million and diluted EPS of $6.59, a 25% YoY increase. EBITDA was $249 million, up 26% YoY; TTM EBITDA was $827 million and net income $577 million .

• Analyst Target Price Expectations: Across 14 analysts, the 12‑month average target is $2,218.64, with a range between $1,900 and $2,800—implying ~45% upside. Needham recently raised its target to $1,950 after upgrading estimates .

5. $Adobe(ADBE)$

• Core Business & Latest Business Developments: Adobe develops creative, digital marketing, and document cloud software, including Photoshop, Acrobat, Firefly, and GenStudio. Recently, it launched new generative-AI features (Firefly/GenStudio) and updated Marketo Engage on July 11 .

• Financial Highlights: In Q2 FY25 (ended May 31), Adobe posted GAAP net income of $1.69 billion (up 7.5% YoY), adjusted EPS of $5.06, and EBITDA of $2.318 billion (up 10% YoY) .

• Analyst Target Price Expectations: The 12-month consensus target ranges from ~$474 (TipRanks average) to $490 (StockAnalysis), high estimates up to $600. However, Rothschild’s recent downgrade cut its target to $280, citing intensifying AI competition .

6. $Fortinet(FTNT)$

• Core Business & Latest Business Developments: Fortinet provides cybersecurity and secure networking through its FortiGate, SASE, and OT solutions. It’s a founding member of FIRST’s CORE program supporting global incident-response capacity and was recognized as a leader in Gartner’s 2025 SASE and IT/OT LAN Magic Quadrants .

• Financial Highlights: For the quarter ended Mar 31, 2025, Fortinet earned net income of $433 million (up 45% YoY) and EBITDA of $557 million (+36% YoY). TTM net income grew to $1.879 billion and EBITDA to $2.319 billion .

• Analyst Target Price Expectations: Analysts currently have a 12-month target price range for Fortinet between $60 and $90, with the average around $75. Barclays recently upgraded Fortinet and raised its price target to $80, citing stronger-than-expected demand in cybersecurity and secure networking.

7. $Veeva(VEEV)$

• Core Business & Latest Business Developments: Veeva provides cloud software for life sciences—Vault CRM, Veeva Development Cloud, and AI analytics—while migrating CRM off Salesforce to its own Vault platform to tighten integration and reduce dependencies.

• Financial Highlights: For the 12 months ending April 30, 2025, Veeva generated net income of $781 million (a 40%+ YoY increase) and EBITDA of $811 million, with diluted EPS of $4.72.

• Analyst Target Price Expectations: Street Analysts maintain an optimistic view, with consensus 12‑month targets around $280–$300, reflecting bullish sentiment after the strong quarter and forward guidance. Some forecasts anticipate upside toward $310–$320 based on robust execution.

8. $Alphabet(GOOG)$

• Core Business & Latest Business Developments: Alphabet continues to embed Gemini AI across Search, Cloud, and advertising while expanding Waymo autonomous rides and Pixel hardware integration.

• Financial Highlights: For the quarter ending March 31, 2025, Alphabet posted net income of $34.54 billion, EBITDA of $35.1 billion, and EPS of $2.81. TTM EPS stood at $8.96, reflecting 46% YoY profit growth.

• Analyst Target Price Expectations: The consensus 12-month target price is around $170, with a range from $160 to $185. Analysts cite strong AI monetization and Cloud growth as key drivers, though some highlight regulatory risks as a potential overhang.

9. $Paycom(PAYC)$

• Core Business & Latest Business Developments: Paycom provides cloud-based payroll and human capital management software for businesses. It focuses on automation and efficiency in HR functions. Recently, the company has emphasized margin control and operational efficiency amid slower top-line growth.

• Financial Highlights: In the first quarter of 2025, total revenue reached $530.5 million, up 6.1% year-over-year. GAAP net income was $139.4 million, or $2.48 per diluted share. Non-GAAP net income was $157.7 million, or $2.80 per diluted share. Adjusted EBITDA was $253.2 million.

• Analyst Target Price Expectations: Nathan Shapiro from Columbia Business School estimates a bull case target price of $1,177 for 2026, implying a 327% upside.

10. $DigitalOcean Holdings, Inc.(DOCN)$

• Core Business & Latest Business Developments: DigitalOcean is a cloud service provider offering infrastructure-as-a-service (IaaS) and platform-as-a-service (PaaS) solutions. It provides developers with powerful virtual machines to access cloud-based infrastructure resources, including compute, storage, and networking capabilities, to support various AI/ML workloads.

• Financial Highlights: For Q1 2025, DigitalOcean reported net income of $38 million, adjusted EBITDA of $86 million, and EPS of $0.39. Trailing 12-month net income was about $108.6 million, EBITDA $241 million, and EPS approximately $1.13.

• Analyst Target Price Expectations: Analysts have set a target price range of $31 to $55 for DigitalOcean. JMP Securities maintains a Market Outperform rating with a $55 target price. Goldman Sachs analyst Gabriela Borges raised the target price from $40 to $44 while keeping the "Buy" rating.

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