Microsoft as a Mirror - What We Can Expect for SaaS in 2023
Tomasz TunguzVenture Capitalist If you were forwarded this newsletter, and you'd like to receive it in the future, subscribe here. Microsoft as a Mirror - What We Can Expect for SaaS in 2023
I’m watching public company earnings to identify early weaknesses in the software market. Yesterday, Microsoft announced earnings. The transcript highlights the major trends in software of 2023. Below, I’ve listed those trends with data & excerpts from the earnings call transcript. 1. Enterprises Have Slowed their Spending, Decelerating Further in December:
Growth is down 15 percentage points or about a third in a year.
It’s mostly a US phenomenon so far:
Expected growth across segments is muted with an average of 5% growth across these B2B categories.
2. Spending Won’t Ramp Again Until Optimization Stops in about a YearCustomers are optimizing their cloud spend in 2023.
3. Machine Learning is a Secular Platform Change & a Growth Driver for Software
4. Microsoft’s Ability to Cross-Sell its Suite is Driving Dominance in Many Categories
Atlassian has 10m active users compared to 90m actives at Github.
UIPath, the leader in RPA reported 10,650 customers in October 2022.
About 70% of commercial Office subscribers use Teams.
This is about 12% of the global information security market according to Gartner. Massive software vendors are indexes of buyer behavior. Yesterday’s call reinforces the cost-focused mindset of the buyer & the lower growth rates startups should expect. Machine learning shines as the one bright spot amidst declining growth. |
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