Glossary term
Operating Margin
Operating income divided by revenue; mature SaaS targets 25%+, and compression is an early agentic-disruption warning.
Operating Margin is operating income divided by revenue, measuring core profitability before interest and taxes. Mature SaaS businesses target operating margins of 25% or higher once growth investment normalizes. The Closelook reading is that margin compression at scale — when a SaaS company cannot expand margins as growth slows — is an early signal that agentic competition is eroding pricing power. See SaaSpocalypse 101.