nice summary, thx. But you kind of left the key question hanging: who are the 'elite few'? I think NOW is likely one but am still concerned its valuation goes to a GAAP multiple. Think VEEV likely another, along with GWRE and PCOR- but again I'm not sure valuations have reset yet. What do you think?
Interesting to see SaaS framed again as a duration asset. From an asset allocation perspective this repricing was almost inevitable once rates moved higher.
In a ZIRP world investors paid for long-dated growth; in a higher cost-of-capital environment the market rewards cash flow and capital efficiency instead.
What we increasingly see across institutional views is that “software” is no longer treated as one theme, dispersion within the sector has become too large.
Will agents need software licenses to operate? I built 6 agents to automate a business process using 1 copilot license. It works well. I will pay Microsoft more to keep the new process in place if they ask.
Great piece though I think you’re wrong about how much ai “agents” can do. A great deal of fluff and fake stuff there. But this was awesome.
https://www.wheresyoured.at/saaspocalypse-now/
Wrote something similar in 2024 about this and happy to see others can see it too. Bad days ahead for SaaS
The seat audit problem is the sleeper issue — contraction shows up in expansion numbers a full year before a customer cancels.
By the time you see actual churn, you've already lost the expansion runway — the damage is baked in 12 months earlier.
it's a slow burn! AI doesn't cancel the contract. it just means you need 35 licenses instead of 50.
nice summary, thx. But you kind of left the key question hanging: who are the 'elite few'? I think NOW is likely one but am still concerned its valuation goes to a GAAP multiple. Think VEEV likely another, along with GWRE and PCOR- but again I'm not sure valuations have reset yet. What do you think?
Interesting to see SaaS framed again as a duration asset. From an asset allocation perspective this repricing was almost inevitable once rates moved higher.
In a ZIRP world investors paid for long-dated growth; in a higher cost-of-capital environment the market rewards cash flow and capital efficiency instead.
What we increasingly see across institutional views is that “software” is no longer treated as one theme, dispersion within the sector has become too large.
Will agents need software licenses to operate? I built 6 agents to automate a business process using 1 copilot license. It works well. I will pay Microsoft more to keep the new process in place if they ask.