The “SaaSpocalypse” isn’t an AI-eats-all story: the market is rewarding some software company earnings and punishing others.
Friday morning’s premarket trading reflected that divide.
Atlassian and Twilio surged before the market open after strong earnings, while Five9 made modest gains. HubSpot closed 19% down on Thursday.
The idea that AI can replace software sold by SaaS companies has hit each of those stocks at various points this year. Over time, though, a more nuanced picture has emerged.
Some SaaS firms have better moats than others, many are also embracing AI, and some firms face company-specific factors.
Atlassian
Atlassian, which makes workplace tools including Jira and Confluence, soared roughly 30% before the bell after easily beating Wall Street’s expectations.
Fiscal fourth-quarter revenue jumped 28% to $1.77 billion, versus analysts’ $1.66 billion estimate, while adjusted earnings of $1.87 a share topped the $1.50 consensus.
Cloud revenue climbed 31% to $1.2 billion. The company pointed to continued strength in cloud adoption and AI-driven product demand as key drivers of its outlook.
CEO Mike Cannon-Brookes told investors that he planned to buy $250 million of Atlassian shares, a show of confidence that the company can weather the SaaSpocalypse.
Twilio
Twilio, which provides business communication software, jumped about 17% premarket after reporting second-quarter revenue of $1.50 billion, up 22% and ahead of analysts’ $1.43 billion forecast. Adjusted earnings came in at $1.47 a share, beating the $1.32 consensus.
The communications-software company also generated a record $353 million in free cash flow. Its third-quarter revenue guidance had a midpoint of $1.51 billion, above Wall Street’s roughly $1.47 billion estimate, as demand for AI voice and messaging helped accelerate organic growth to 17%.
Five9
Five9 edged up about 1.7% after a modest beat. The cloud-based call-center software company reported a second-quarter revenue rise of 10% to $312.4 million, topping the $306.6 million consensus, while adjusted earnings of 70 cents a share came in roughly 2 cents ahead of expectations.
Subscription revenue grew 14%, and AI revenue surged 78%, but profitability was mixed: adjusted gross margin narrowed to 61.4% from 63% a year earlier, while adjusted earnings fell from 76 cents per share to 70 cents.
HubSpot
HubSpot, which sells marketing, sales, and customer service software, ticked higher before the bell on Friday, but only after closing down 19% on Thursday. Its second-quarter revenue rose 20% to $911.7 million, beating the $898.3 million consensus, and adjusted earnings of $3.26 a share topped estimates of $3.02.
However, the company’s third-quarter revenue forecast came in below Wall Street’s expectations. The company forecast revenue of $924 million to $925 million, below analysts’ estimate of roughly $941 million, and lowered the midpoint of its full-year forecast by $22 million.
On the earnings call, CEO Yamini Rangan said pricing and product changes had extended the buying process, while tighter customer budgets were leading to longer sales cycles.
CFO Kate Bueker said HubSpot added 7,000 customers, below its expectation of 9,000 to 10,000.
