VAST Data launches F funding round, highlights customer wins

VAST Data says it’s officially launching its $1 billion F-round of funding, and has new "rule of 40" numbers out that appear to show a high growth rate and profitability. 

VAST often highlights its financial performance by calculating how it's doing against the software industry's "Rule of 40" benchmark. The Rule of 40 states that a SaaS company's topline growth rate plus its profit margin should equal at least 40 percent. 

We were told that VAST is currently sitting at:

•  $500 million+ CARR
•  $4 billion+ cumulative bookings
•  Rule of 40 at 228 percent
• $30 billion valuation

CARR stands for Contracted Annual Recurring Revenue. It’s different from ARR which is based on current run-rate revenue from active customers. CARR represents the annualized value of all committed, contracted recurring revenue from signed customer agreements, and so is generally larger than ARR.

The cumulative bookings number is impressive but the rule of 40 number (RO40) is surprisingly high. The RO40 number, popularized by Brad Feld, a venture capitalist,  applies to SaaS companies and is calculated by adding together a business’ annual revenue growth rate and its profitability margin, either meaning its EBITDA margin (earnings before interest, taxes, depreciation, and amortization) or free cash flow, as a percentage of revenue.

If the sum of the two is 40 percent or more then a company is considered healthy or high-performing. It suggests that high-growth rate, early stage SaaS businesses that are not making a profit could still be healthy because their growth rate compensates for their cash burn rate. It is not just used by early-stage startups. Mature SaaS companies can be healthy, even if slow-growing, because they are highly profitable.

In April, 13 year-old Cohesity said it was hoping to achieve more growth in ARR in the second half, “with management targeting a Rule of 40 score in the mid-30s (calculated as ARR growth + unleveraged free cash flow margin).”

In February, publicly owned Backblaze CFO Marc Suidan said: "We made meaningful progress towards becoming a Rule of 40 company, with our combined B2 revenue growth and free cash flow margin improving from 9 percent to 35 percent.”

Nutanix in August last year was similar, when CFO Rukmini Sivaraman said: “Our fiscal 2025 results demonstrated a good balance of top and bottom line performance with 18 percent year-over-year revenue growth and strong free cash flow generation. These results drove a Rule of 401 score of 48, our second year in a row above 40.” 

Publicly owned Commvault achieved a 41 RO40 score last year. We understand that most good software businesses are around 40 percent, while exceptional ones can be significantly higher. A VAST spokesperson tells us: “For reference, Palantir was 127 percent for FY26."

Ten year-old VAST has an extraordinary 228 percent RO40 score. So, in the extreme cases, it might have either a 228 percent revenue growth rate and zero profit/some loss or a 228 percent profit and zero growth. We think it is a combination of high growth and good profitability.

VAST co-founder Jeff Denworth told us: “Our customers tend to buy big, and they tend to buy often. VAST sits behind some of the world’s largest AI systems, and that concentration of investment allows us to scale a software business without relying on venture capital to fund growth.”

"We’ve been deliberate about focusing on the upper end of the AI market, where the problems are more complex but also more consistent. That lets us grow quickly without fragmenting the product or the organisation.

"The result is a model where we’re not under pressure to manage for short-term optics, and we can stay focused on solving the hardest data and AI problems at scale.”

Denworth has written a blog, N=1: How VAST Built the De Facto Data Layer for AI, which will be posted on VAST's blog webpages today.