The End of Growth in Software: Below 5%
How AI and seat-based models are transforming the software industry?
1The End of Slow Growth
For the past two decades, slow growth was acceptable for B2B software companies. However, the rise of AI and the collapse of seat-based models have changed this. Companies growing below 5% are now evaluated differently by the market.
2The Case of Dropbox and PagerDuty
Dropbox grew only 0.8% last quarter and predicts a revenue decline for the next year. PagerDuty is almost stagnant with 1% growth. Both companies are experiencing the collapse of seat-based models due to AI's impact.
3Zoom's Situation
Zoom showed 5.5% growth last quarter, but enterprise customer spending is decreasing. Net dollar expansion rate fell to 99%, indicating existing customers are spending less.
4DocuSign's Trend
DocuSign appears healthier with 8.7% growth, but its five-year average has dropped from 15% to single digits. The trend has become more important than the current level.
5AI's Impact
AI directly affects seat-based models. One AI agent can do the work of ten support representatives. This leads customers to purchase fewer seats and halts companies' growth.
6The Rise of Infrastructure Companies
Companies investing in AI infrastructure are growing rapidly. Cloudflare grew 28-29%, Snowflake 30%, and Twilio 20%. As AI usage increases, these companies' revenues also rise.
7The Future of the Software Industry
There is no longer a single software category. A distinction exists between infrastructure companies fueled by AI and application companies consumed by AI. This change is shaping the industry's future.
Original article: SaaStr — Yazılım Şirketlerinde Büyümenin Sonu: %5'in Altı