Every week I’ll provide updates on the latest trends in cloud software companies. Follow along to stay up to date! Software Sentiment Software sentiment is incredibly low at the moment - and rightfully so. Q1 earnings have been a disaster, and they’ve gotten worse as companies with April quarters started reporting. Nearly 70% of software companies who reported Q1 with an April quarter end guided Q2 below consensus! That figure is worse than the onset of Covid when everyone guided low because they weren’t sure if the world was ending! Of the companies with March quarter ends ~51% guided Q2 below consensus. That figure is still quite bad, but the environment in software land definitely got worse in April. What’s a bit more confusing, is despite the Q2 guide downs, full year guides haven’t come down that much, and in some cases have been raised. So there’s a bit of a “trust us back half acceleration is coming.” Time will tell… Looking at the basket of ~80 software companies that I track, the median year-to-date (YTD) performance is down 17%. No one has been spared, not even the larger cap software companies. Workday / Salesforce both fell >15% after earnings, with larger drops coming in the days after earnings. . Cloudflare and Datadog both fell >10% the day after earnings and have dropped a lot more since then. Mongo dropped >30%. Here’s a quote from Salesforce’s earnings on Wednesday:
Best piece I read today! What a fabulous analysis of the state of the state in growth software. Jamin - thank you! Investors are realizing that many of their darling stocks are not that mission critical anymore. Perhaps they never were in the first place. Cheers!
Best piece I read today! What a fabulous analysis of the state of the state in growth software. Jamin - thank you! Investors are realizing that many of their darling stocks are not that mission critical anymore. Perhaps they never were in the first place. Cheers!
C
Beautiful AL
Very professional, so a cautious investment strategy seems appropriate.