Like hemlines and haircuts, stocks go in and out of fashion. So do the ways companies communicate their performance to investors. Whatever numbers investors want to see, management will supply them, especially if they can be easily tailored to look flattering.

For so-called SaaS companies, selling software as a service, a favorite metric nowadays is something called the “Rule of 40.” The first thing to know is it isn’t a rule, because there is no standard definition for what it means. For some companies it has become a big deal to claim membership in the “Rule of 40 club” nonetheless.