Enterprise software companies develop applications, platforms, and tools that automate business operations across every industry. The shift from perpetual licenses to subscription-based SaaS models transformed the economics of software — creating high-margin recurring revenue streams with strong retention. Software stocks are valued on revenue growth, net revenue retention, and the expanding presence of AI-native features that command pricing power.
Track net revenue retention (NRR) above 120% as a sign of healthy upsell. Annual Recurring Revenue (ARR) growth and free cash flow margin are the two most important metrics. Watch for AI co-pilot adoption rates driving seat expansion.