Software market insights by Vista Equity 👁

And also: Cisco and Enfusion report comments, WEKA $135 raise, Elastic Cyberattack report, Box & Zoom integration, and PTC acquisition of ServiceMax.

This is the Cloudly Update. Helping you stay above the Clouds.

Today in the update: We share Vista Equity's comments on the state of the Software market, Cisco and Enfusion report comments, WEKA $135 raise, Elastic Cyberattack report, Box & Zoom integration, and PTC acquisition of ServiceMax.

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Vista Equity Partners is one of the largest Private Equity firms buying SaaS and Software companies. The companies they own are collectively at $24B in ARR.

Vista knows exactly what is happening in SaaS buying, especially in enterprise and mid-market.

  • On average, 50+ SaaS companies are at $200m+ ARR with a 20%-25% growth rate vs. 25% last year. It is some slowdown for sure but not a downturn.

  • Some sectors like cybersecurity, productivity, and “no code” have not witnessed any slowdown.

  • Vista invested in established SaaS/Software companies with brands instead of raw start-ups.

The environment is not getting easier in SaaS, that is for sure. And some categories are seeing more headwinds than others. But it is not going to be as bad as in 2021.

Cisco reported Q1 EPS of $0.86, $0.02 better than the S&P Capital IQ Consensus of $0.84. Revenue came in at $13.63 billion vs. market expectations of $13.29.

ARR grew 7% year-on-year at 23.2 billion, and product ARR was up 12% compared to last year.

Non-GAAP operating margin was 31.8%, in-line with prior guidance of 31.5-32.5%, but below 33.3% a year ago.

Company issues guidance for Q2 and expects EPS of $0.84-0.86, excluding non-recurring items, vs. $0.85 S&P Capital IQ Consensus. Sees Q2 revenue growth of 4.5-6.5% year-on-year, computed as $13.29-13.55 billion vs. $13.25 billion S&P Capital IQ Consensus. Company guides to Q2 non-GAAP operating margin of 31.5-32.5%.

Cisco raises guidance for FY23, sees EPS of $3.51-3.58, excluding non-recurring items, vs. $3.53 S&P Capital IQ Consensus and $3.49-3.56 prior guidance. FY23 revenue growth is expected between 4.5-6.5% (vs. prior guidance of +4-6%), which is computed as $53.88-54.91 billion vs. $54.10 billion S&P Capital IQ Consensus.

Enfusion, a leading cloud-based investment management software, and services provider, reported $0.02 earnings per share for the third quarter of 2022.

35% year-over-year growth was recorded in total revenue, at $39.2 million. Recurring subscription revenue accounts for 98% of total revenue.

Adjusted EBITDA was $5.4 million compared to $6.3 million year-over-year. EBITDA margin stood at 13.9% compared to 21.8% in Q3 2021.

ARR was $158.7 million, up 33% year-over-year.

Enfusion expects steady fourth-quarter results and expects total revenue in the range of $39.5 to $40.5 million. And Adjusted EBITDA between $5.5 to $6 million.

For the full financial year, the company expects total revenue from $149.3 to $150.3 million and adjusted EBITDA of $18.1 to $18.6 million.

Elastic released the 2022 Elastic Global Threat Report.

Nearly 1 in 3 (33%) attacks in the cloud leverage credential access, indicating that users often overestimate their cloud environments' security and consequently fail to configure and protect them adequately.

Commercial software designed to help security teams is being used by threat actors to evade those same teams.

More than 50 endpoint infiltration techniques are being utilized by threat actors, suggesting that endpoint security is working well. Its sophistication requires threat actors to continually find new or novel methods of attack to be successful.

WEKA, a global AI data platform provider for data centers, raises $135 million in an oversubscribed Series D funding round led by Generation Investment Management. It doubled its previous valuation in this round.

Notable contributions are seen from 10D, Atreides Management, Celesta Capital, Gemini Israel Ventures, Hewlett Packard Enterprise, Hitachi Ventures, Key1 Capital, Lumir Ventures, Micron Ventures, Mirae Asset Capital, MoreTech Ventures, Norwest Venture Partners, NVIDIA, Qualcomm Ventures, Samsung Catalyst Fund.

Generation's investment in WEKA is part of its Sustainable Solutions Fund IV, which conducts deep research into innovative 'green data' companies that are helping to address the rapid increases in energy consumption associated with the exponential growth of data and modern data management environments.

Box announced the general availability of an enhanced Box app for Zoom. It will enable customers to automatically save select Zoom recordings directly to Box. Users can access and share Zoom audio, video, and transcripts through Box. It has the option to choose how long recordings can be stored.

With this new feature, joint customers can manage their content in one place while maintaining enterprise-grade security, compliance, and governance all within Zoom.

PTC to acquire ServiceMax for approximately $1.46 billion from an entity majority owned by Silver Lake. The transaction is expected to close in early January 2023.

The acquisition will strengthen the service capabilities of PTC's closed-loop PLM portfolio. And is expected to contribute to PTC's SaaS ARR (around $160 million) in FY '23.

PTC and ServiceMax support manufacturers of complex, highly configured products for medical devices, industrial products, aerospace, and related verticals.

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