This past week has been a challenging one for the software and enterprise tech industry. Salesforce, a prominent cloud software vendor, experienced a significant setback with a nearly 20% drop in its shares. The company reported weaker-than-expected revenue and issued disappointing guidance. CEO Marc Benioff acknowledged that the growth seen during the Covid age was followed by challenges as companies had to integrate new technology and rationalize their operations. This sentiment was echoed by other enterprise software companies who have also had to adjust post-pandemic.
Several other software companies faced challenges as well. MongoDB, SentinelOne, UiPath, and Veeva all lowered their full-year revenue forecasts. The WisdomTree Cloud Computing Fund, which tracks cloud stocks, saw a 5% decline – the sharpest since January. Companies like Paycom, GitLab, Confluent, Snowflake, and ServiceNow also experienced significant losses in their stock values, with some dropping by at least 10%.
Dell, known for selling PCs and data center hardware, raised its full-year forecast but noted a shrinking margin due to the growing portion of AI servers in its product mix and higher input costs. Consequently, Dell shares fell by 13% for the week. The company, viewed as benefiting from the generative AI trend, faced pressure from elevated expectations and analyst concerns.
Okta, an identity software maker, saw its stock price decrease by almost 9% as it cited weaker subscription backlog and macroeconomic challenges impacting customer acquisition and expansion efforts. The company’s finance chief highlighted ongoing macroeconomic headwinds affecting Okta’s performance.
UiPath and SentinelOne faced a slowdown in business activity due to changing customer buying habits caused by economic uncertainties. Customers were becoming more hesitant to commit to long-term deals, impacting these software companies. UiPath’s CEO acknowledged a downturn in business pace, while SentinelOne’s CEO noted a shift in how customers evaluate software, leading to missed guidance estimates and a 22% decrease in the company’s stock price.
Veeva, specializing in life sciences software, took a hit as concerns about spending in the latter half of the year arose. CEO Peter Gassner mentioned the disruption caused by generative AI, which has become a competing priority for clients. This shift in priorities led to a nearly 15% decline in Veeva’s stock value.
Despite the challenges faced by many in the industry, Zscaler emerged as a bright spot with an 8.5% increase in its stock price. The security software provider exceeded expectations for the quarter and raised its full-year forecast, citing strong demand for its platform amid a growing need for cyber and data protection.
The software and enterprise tech industry experienced a tumultuous week, with companies like Salesforce, Dell, Okta, UiPath, SentinelOne, and Veeva facing various challenges. While some struggled with shrinking margins, shifting customer behavior, and generative AI concerns, others like Zscaler managed to perform well amidst the volatility. This upheaval serves as a reminder of the ever-changing nature of the technology landscape and the need for companies to adapt swiftly to evolving market conditions.
Leave a Reply