What Historical SEC Filings Say About Software’s Post-Covid Reset

During the Covid years, public software companies operated in a far more expansive market. Capital was easier to raise, growth was rewarded aggressively, and commercial ambition often carried more weight than near-term profitability.

That environment changed sharply after 2022. Financing became more expensive, investors became more selective, and management teams came under greater pressure to show discipline rather than simply momentum.

Most commentary on that shift has focused on valuations, sentiment, or the broader direction of the tech market. The more useful question is operational: what changed inside the businesses themselves?

Historical SEC filings suggest that the software reset was not only a market re-rating. It was also an operating-model reset. Across a cleaned public software peer set, the median company preserved high gross margins, reduced spending intensity, and moved from negative to positive operating margins over the last 16 quarters.

That does not prove a single cause. But it does show a clear pattern in reported behaviour: public software companies appear to have adapted to a less expansionary environment by running with greater discipline beneath gross profit.

What the data covers

The analysis covers 16 quarters of SEC financial statement data, from 2022 Q1 through 2025 Q4. The company universe was narrowed to a cleaned public software peer set, reaching 77 companies by 2025 Q4, and focusing on businesses with broadly software or SaaS-like operating models rather than the wider technology market.

Five reported metrics were used:

• Revenue
• Gross profit
• Operating income
• Research and development expense
• Sales and marketing expense

From those inputs, four operating ratios were calculated:

• Gross margin
• Operating margin
• R&D intensity
• Sales and marketing intensity

The emphasis is on medians rather than simple averages. In software, a small number of unusual companies can distort the headline picture. Medians give a cleaner view of what the typical company in the peer set is doing.

This is a filings-led approach rather than a valuation-led one. It does not attempt to infer market mood, and it cannot by itself isolate every cause behind the changes it captures. What it can do is show how the median public software company’s operating profile evolved as the market moved out of the Covid-era expansion phase.

The real shift happened below gross profit

The clearest sign of the reset in the filings is straightforward: the median public software company became meaningfully more profitable at the operating level over the last 16 quarters.

In 2022 Q1, median operating margin stood at roughly -9.1%. It deteriorated further in the middle of that year, reaching roughly -16.0% in 2022 Q2. By 2025 Q4, it had improved to roughly +4.4%.

That is not a small adjustment. It marks a move from a sector that was, at the median, losing money on an operating basis to one that had returned to modest profitability.

That alone does not explain how the change happened. But it does establish the main point: the post-Covid reset was not only visible in software valuations. It showed up in reported operating performance.

Put differently, the market’s shift after 2022 was eventually expressed in the operating model itself. The filings suggest that public software companies did not simply endure a tougher environment. They adjusted to it.

Commercial discipline drove much of the recovery

If operating margin is the headline result, sales and marketing intensity is the clearest explanation.

The median company in the sample spent roughly 37.0% of revenue on sales and marketing in 2022 Q1. That figure rose above 41% in mid-2022. By 2025 Q4, it had fallen to roughly 33.0%.

That shift is large enough to matter. It suggests the sector changed how aggressively it was willing to spend in pursuit of growth.

During a more expansionary phase, heavy go-to-market investment can be justified by easier capital, stronger demand assumptions, and a greater tolerance for delayed profitability. In a tighter environment, those assumptions become harder to sustain. The filings suggest public software companies adjusted accordingly.

This is one of the clearest ways the post-Covid reset shows up in the data. The evidence does not prove why every management team changed course, but it is consistent with a sector that became less willing to subsidise growth through commercial intensity alone.

This was not simply a cost-cutting story

That is where the R&D data matters.

A simpler version of the story would be that software companies responded to a tougher market by broadly slashing costs. The filings point to something more selective than that.

Median R&D intensity did come down over the period. It stood at roughly 24.1% of revenue in 2022 Q1, rose above 27% by 2022 Q3, and eased to roughly 21.9% by 2025 Q4.

That decline is meaningful, but it does not read like abandonment of product investment. Even by late 2025, the median company in the sample was still allocating more than one fifth of revenue to R&D.

That is an important distinction. The sector appears to have become more disciplined, but not indiscriminately so. Product investment moderated, yet remained substantial. The stronger signal is not retreat. It is rebalancing.

That matters to the broader narrative. The filings suggest that the post-2022 reset was not simply about cutting deeper. It was about changing the mix of spending while keeping meaningful investment behind the product.

The underlying economics remained intact throughout

That matters because the sector’s operating improvement becomes more interesting when set against what did not change.

Gross margins remained consistently high across the full period. Median gross margin began at roughly 73.5% in 2022 Q1 and ended at roughly 76.3% in 2025 Q4.

The movement is modest, but the broader point is more important than the delta. Public software retained the high-margin gross-profit profile that has long distinguished the sector. The model itself did not break. What changed was the level of discipline applied beneath gross profit.

That makes the broader trend easier to interpret. These businesses did not recover by sacrificing their core economics. They improved operating performance while preserving them.

In that sense, the filings point to a more specific conclusion than “software became harder”. They suggest the sector remained structurally strong, but became more measured in how it chose to deploy that strength.

What the current trend suggests for the next 6–12 months

Historical filings cannot predict the next year with certainty. They can, however, show the direction of travel.

On that basis, the most defensible near-term view is that public software remains in a more disciplined operating phase than it was in 2022 and early 2023. Gross margins have stayed high, sales and marketing intensity has come down, R&D intensity has moderated, and median operating margins have moved back into positive territory.

If that pattern continues, the next 6–12 months are more likely to be characterised by gradual efficiency gains than by a return to growth-at-all-costs behaviour. That does not imply a straight line. Quarter-to-quarter variation should be expected, and some parts of the market will remain more aggressive than others. But at a sector level, the prevailing direction still appears to be one of discipline rather than renewed expansionary excess.

That is an important distinction. The data does not point to a dramatic new phase for software. It points to a more measured one: a sector that still looks attractive at the gross-margin level, but more selective about how much spending it is willing to carry below that line.

What this analysis can and cannot say

This analysis is designed to show how a cleaned public software peer set has changed operationally over time. It is not intended to explain every cause behind that change.

The data supports a clear view of the outcome. Across the last 16 quarters, the typical company in the sample preserved strong gross margins, reduced spending intensity, and improved operating profitability. What it does not do is isolate the exact contribution of every external factor, whether interest rates, market sentiment, customer spending patterns, or company-specific strategy.

It also reflects a defined public-company universe rather than the entire technology market. Private companies, very small public companies, and software-adjacent businesses may have behaved differently. Some quarter-to-quarter movement may also reflect seasonality or reporting-pattern effects rather than a pure structural shift.

Those limits matter, but they do not weaken the main conclusion. Historical filings point to something specific: the post-Covid reset was not only visible in market multiples. It was visible in how public software companies changed the way they operated.

Public software still looks like a high-margin sector. The difference is that it now looks far more disciplined about what it is willing to spend to sustain that position.

What this 16-quarter review suggests

Taken together, the filing data points to a sector that did not lose the basic strengths of the software model, but did become more disciplined in how it was run.

Our data suggests the following:

• Public software preserved high gross margins throughout the reset.
• The clearest operational change was a recovery in operating margin.
• Lower sales and marketing intensity appears to have been a major part of that improvement.
• R&D intensity moderated, but did not collapse, suggesting a selective rather than indiscriminate response.
• The sector now looks more disciplined than it did in 2022, even if quarter-to-quarter variation remains.

The broader implication is not that software entered an entirely new era. It is that the sector appears to have moved into a more measured one: still structurally attractive, but less willing to fund growth at any cost.

Methodology and sources

This analysis uses structured SEC financial statement data covering 16 quarters from 2022 Q1 through 2025 Q4. The company universe was narrowed to a cleaned public software peer set, with the emphasis placed on businesses with broadly software or SaaS-like operating models.

The analysis draws on five reported metrics:

• Revenue
• Gross profit
• Operating income
• Research and development expense
• Sales and marketing expense

From those inputs, four operating ratios were derived:

• Gross margin
• Operating margin
• R&D intensity
• Sales and marketing intensity

Sector-level trends are shown using medians rather than simple averages, in order to reduce distortion from outliers.

Source: SEC financial statement data sets .