Beating guidance, breaking quarterly records, accelerating revenue, and raising guidance. That’s what EVERY software company that has reported this quarter is doing or has done a combination of. AI is the best thing to happen to SaaS since the cloud. Below is the data:
Palantir’s revenue grew 93% year-over-year and 19% sequentially to $1.935 billion. Zeta had its 20th consecutive beat-and-raise quarter. Freshworks beat the high end of guidance with 16% year-over-year growth. Klaviyo beat revenue expectations, raised guidance, and signed it’s largest deal ever. Atlassian’s adjusted EPS was $1.87 against a consensus of $1.50, a 24.67% beat, on revenue of $1.77 billion growing 28% year-over-year. Dynatrace exceeded the high end of every single guided metric simultaneously while delivering the fourth consecutive quarter of organic net new ARR acceleration. Datadog had its best growth quarter in four years; revenue was $1.12 billion, up 36% year-over-year. Cloudflare’s revenue was $696.1 million, up 36% year-over-year. Large customers reached 4,698, up 27% year-over-year, with 986 net additions, a record by a wide margin and the most ever added in any 12-month period. ServiceNow beat guidance on nearly every metric and raised full-year subscription revenue guidance raised to $15.755-$15.770 billion, implying 21% constant currency growth. Jfrog’s revenue was $163.8 million, up 29% year-over-year, beating the top end of guidance. When OpenAI had a sandbox breach, they contacted JFrog immediately. JFrog remediated fast, confirmed the fix, and maintained transparency throughout. Twilio set records in all metrics and raised guidance. Shopify had its fifth consecutive quarter of GMV growth above 30%. FIVN’s revenue beat the high end of guidance and their full-year AI growth outlook was raised from more than 40% to at least 60%. Procore revenue was $375 million, up 15.8% year-over-year, beating the high end of guidance by 2.5%, while achieving profitability and raising guidance. Paylocity’s revenue accelerated for the second consecutive quarter to ~12% while EBITDA margin expanded to 37%. Doximity’s revenue and EBITDA beat the high end of guidance. Salesforce’s Q2 was the most commercially spectacular in the company’s history. Crowdstrike’s call was also historic: every single guided metric set an all-time record simultaneously. SentinelOne’s revenue was $292 million, up 21% year-over-year, beating the high end of guidance. Adjusted EPS of $0.08 doubled year-over-year, beating estimates. Workday’s subscription revenue was $2.471 billion, up 14% — ahead of guidance. Non-GAAP operating margin was 31.1%, beating guidance. Okta had a record quarter and revenue of $805 million grew 11% year-over-year, beating the $793 million consensus.
The biggest driver of the performance is because AI is creating new markets for software that did not previously exist. The examples:
At Dynatrace, AI workloads generate dramatically more logs, traces, and metrics than traditional workloads, which is why log management reached nearly $200 million in annualized consumption, nearly doubling since crossing $100 million just two quarters ago. At Cloudflare, non-human traffic exceeded human traffic on their network, and in the CEO’s view in five years, non-human traffic will be 1,000 times human traffic. “Humans will be a rounding error on the internet, not because human traffic goes down, but that’s just how fast non-human traffic is growing.” ServiceNow put it well : every ungoverned asset and agentic identity multiplies the blast radius, making their cyber security product more critical than ever. Jfrog’s CEO commented “AI agents are becoming first-class citizens of the software supply chain.” At Shopify, AI-driven traffic and orders to stores tripled year-over-year in Q2. New buyer orders from AI channels arrived at nearly twice the rate of other channels. Data center construction is of course driving the need for more Procore software. According to Salesforce, “there is a huge amount of value that has been trapped in Salesforce. Customers have put hundreds of billions of dollars into Salesforce. Claudeforce unlocks it.” At Crowdstrike, their AI Detection and Response is the fastest-ramping product in CrowdStrike’s history. Ending ARR nearly tripled sequentially in Q2. The HuggingFace sandbox breach shows the importance of SentinelOne’s visibility offering, because “securing AI requires deep visibility directly at the point of execution across endpoints, cloud workloads, and the underlying infrastructure where agents operate.” AI ARR reached nearly $600 million growing over 200% year-over-year, and 5,500 customers are now using at least one organic agent. Okta reported one customer went from 50 undetected Claude agents in it’s environment to 1,500 in two weeks; a recent surveys across Okta’s customer base found that 81% of CISOs are aware that they are exposed with agents deployed in their enterprises where they do not yet have an adequate security platform in place.
There will be no bigger beneficiary of the AI wave than SaaS companies. Mark those words.
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