SaaS pocalypse is worse than it looks
Public B2B software companies face structural growth deceleration and downward earnings revisions because they have failed to monetize the massive industry spend on AI and LLMs.
The argument
The guest argued that backward-looking metrics like Net Revenue Retention (NRR) and multi-year contracts are temporarily masking a deeper decay in software growth. He believes that public software companies will continue to miss numbers and be forced to cut up to half of their staff to meet free cash flow expectations as growth drops to the teens.
The thesis, stress-tested
✓ What validates it
- ✓Continued downward revisions of forward earnings estimates across major SaaS companies
- ✓Widespread layoffs and cost-cutting announcements in the software sector over the next two quarters
▸ Risks discussed
- ▸Successful deployment of AI agents (e.g., Salesforce's Agentforce) could reaccelerate growth
- ▸Low valuations (7-9x EBITDA) protect some software stocks from further steep declines
Hear it yourself
"It's just we we everybody has lost the way to growth. And I think because of NRR, because of revenue retention, because so many of these numbers are backwards looking, I think almost everyone is worse than it looks."
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