We follow 81 publicly traded SaaS compmb is anies, of which 35 have had their Q4 earnings calls. We went through those calls and pulled all the quotes and comments regarding the economy and ‘state of the customer’. Below are the key themes, and yes we absolutely dumped those quotes into Claude for this analysis.
AI is no longer a feature for the customer. The biggest theme is the convergence of AI from a product feature into a core business model. Palantir declared that “everything we’ve built over two decades is converging into this moment,” while Procore described its move into agentic AI as “inevitable rather than opportunistic.” Microsoft told investors its total addressable market “will grow substantially across every layer of the tech stack” as AI diffusion accelerates. These aren’t incremental product updates rather they are companies reorienting their entire strategic identity around AI. Unity is displacing commoditized ad network revenue with AI platform revenue. JFrog sees a “tsunami of binaries” created by AI coding agents that demands new infrastructure. The narrative has shifted decisively from “we are building AI tools” to “AI is reshaping what we are.”
Agentic AI is what the customer wants. Beyond general AI adoption, a more specific theme emerged around agentic AI whereby autonomous systems that reason, act, and resolve tasks without human hand-holding. Procore demonstrated an AI agent that watched a job site video, identified structural issues, cross-referenced drawings and specifications, and initiated resolution workflows, entirely on its own. Twilio described building “foundational infrastructure” with persistence, memory, and context that allows any agent to be spun up on its platform. Waystar noted customers want to “consume AI in a very thoughtful way,” reflecting a healthy tension between excitement and governance. The companies that establish themselves as the trusted layer for AI agents, not just AI features, will capture disproportionate value.
The ideal customer is up market. Across multiple companies, a quiet but significant strategic pivot was underway: the deliberate move away from small, self-serve customers toward larger, higher-value enterprise relationships. Bill.com added roughly 4,000 net new customers in Q2 but signaled that number would trend down as it refocuses on larger accounts. Monday.com acknowledged that “the cost to acquire and expand self-serve customers increased over the past year and returns have been below historical levels,” prompting a shift toward higher-ROI enterprise opportunities. RingCentral noted more pricing pressure in enterprise than in SMB, while Atlassian emphasized that customers are choosing them “in bigger ways and bigger numbers than ever before.” The self-serve growth engine that defined much of the 2020–2023 SaaS era appears to be sputtering, and the industry is rebalancing toward depth over breadth.
The economy is worrying everyone. There were macroeconomic caution threads through nearly every set of remarks. SPS Commerce described 2025 as a “tough year” in its end market, driven by global trade uncertainty and invoice scrutiny. Monday.com flagged “a lot of noise in the market” and described its no-touch demand environment as “choppy and volatile.” Alarm.com devoted significant language to tariff exposure and geopolitical trade uncertainty. Dropbox warned that some users view subscriptions as discretionary purchases that could be cut in a downturn. Blackline said its 2026 projections assume “the current state we’re in today,” noting approximately one million corporate job layoffs in recent months. The consistent posture across the group is one of cautious optimism. Businesses are growing, but executives are building in conservatism rather than betting on acceleration.
The workforce shrinkage is real. Several companies with unique windows into workforce data offered a nuanced but consistent read on employment. Paylocity noted year-over-year workforce levels were “up modestly” in Q2 but flagged an assumption of “flat employment levels year over year” in the back half of the year calling it “a slight degradation” from the first half. Blackline’s comment about one million corporate job layoffs provides a stark data point to anchor that conservatism. Meanwhile, Bill.com’s payment volume data showed continued strength in manufacturing and an uptick in construction, two sectors that had been under pressure, suggesting some rotation in economic momentum even as white-collar employment softens. For software companies whose revenue scales with customer headcount or transaction volume, these employment trends are a material variable worth tracking closely.
Cloud migration is still a driver. Not every tailwind is new. Dynatrace and DataDog both offered confident assessments of their demand environments, grounded in secular trends that have been building for years. DataDog stated plainly that “digital transformation and cloud migration are long-term secular growth drivers” with “no change to our overall view.” Dynatrace pointed to hyperscaler revenue “approaching $300 billion in annualized revenue from AWS, Azure, and GCP alone, growing in the high twenties.” These are not cyclical numbers. They reflect a fundamental, ongoing shift in how enterprises run infrastructure. As AI workloads proliferate and require sophisticated observability to manage cost, latency, and reliability, companies positioned at the intersection of cloud and AI monitoring are sitting on a compounding opportunity.
Healthcare and government are bright spots? Two verticals stood out for their relative stability and even strength: healthcare and government. Waystar entered 2026 with what it called “the largest implementation backlog in our history,” expecting mid-sized health systems to recover millions in previously missed reimbursement through AI-powered revenue cycle management. HealthStream described “broad-based customer demand across our offerings.” On the government side, Palantir’s U.S. government business grew 66% year over year, and Microsoft noted that even amid federal procurement complexity and fewer working days, it was “still able to get very, very nice deals.” Qualys confirmed that customers are prioritizing security within IT budgets, keeping its selling environment stable. These verticals are not immune to budget pressure, but the ROI case for software in healthcare administration and defense is proving durable in ways that discretionary enterprise software is not.
These valuations are bullshit. The most candid quote of the entire batch came from ZoomInfo, which stated bluntly that its share price is “completely disconnected from economic reality” given “unprecedented negative sentiment of public markets toward anything software-related.” Ziff Davis invested $174 million in share buybacks, similarly signaling management’s belief that their stock undervalues the business. This sentiment reflects a broader frustration among profitable, growing software companies that are being tarred with the same brush as weaker peers in a risk-off market environment. For investors willing to look past the sentiment, the underlying operating commentary from many of these companies (stable demand, improving margins, accelerating AI revenue) tells a more constructive story. The gap between market perception and operational reality may be the most interesting signal of all heading into 2026.
We will continue to update this post as more earnings calls come out.
Thank you for your readership. See more blogs and SaaS data at blossomstreetventures.com. Email the author at sammy@blossomstreetventures.com.