Profitable growth
Revenue growth accompanied by maintained or improved profitability. It contrasts with loss-making growth, in which a company sacrifices margins to gain market share rapidly.
In practice
The Rule of 40 is a standard SaaS evaluation metric: the sum of the annual growth rate and operating margin must exceed 40. A company growing at 30 percent with a 10 percent margin scores 40 — acceptable. One growing at 15 percent with a 5 percent margin scores 20 — insufficient to justify premium multiples. Beyond SaaS, the principle remains valid: growth and profitability should progress together, not at each other’s expense.