ETR reviews its latest JUL24 TSIS data and trends for four companies reporting earnings next week; read on as we discuss ZoomInfo’s NDR decline mirroring its drop in Net Score, Jamf retaining dominance within UEM despite a recent drop off in positive survey intentions, HubSpot’s declining data within SMBs in the wake of Google terminating its alleged acquisition, and DigitalOcean’s sharp Net Score inflection as competition within cloud computing remains strong.
Key Takeaways:
• Weakness in large index cuts for ZoomInfo remains our top concern from our IT decision-maker spending data as the company’s Net Dollar Retention rate has fallen significantly in the past few years.
• Despite a decline in positive spending intention citations since January, Jamf trails only Microsoft for the highest Net Score within the Unified Endpoint Management sector.
• With declining Increase citations and elevated Replacement responses among SMB customers, we issued a negative outlook HubSpot’s data set, following the company purportedly no longer being acquired by Google.
• DigitalOcean’s Net Score has inflected sharply upwards with a 14-percentage point increase since our last second half survey, possibly pointing to healthier Cloud IT budgets at the lower end of the market.
This week, we’ve seen mixed results across TMT names we track with strength in certain names but a slight miss in Azure cloud revenue from Microsoft. Management announced that Azure growth included eight points from AI services and that demand remained higher than capacity, but the 29% y/y growth result in the segment fell just short of expectations. As we continue to slog our way through the busiest two-week reporting period, we further highlight ETR’s data behind ZoomInfo, Jamf, HubSpot, and DigitalOcean from our latest July 2024 Technology Spending Intentions Survey (TSIS). Below, we highlight some key takeaways; however, the full report can be accessed by contacting our service team.
ZoomInfo: Concerns Lay Among the Largest Customers
ZoomInfo is set to report on August 5th, after market close. We issued our ZoomInfo TSIS report with a continued Negative outlook on the data set, as elevated negative spending intentions remain prevalent. This is especially notable among organizations in large index cuts, including the Fortune 500 and Global 2000. ZoomInfo’s slowdown in Global 2000 spending plans (N = 42) is driven by extremely negative spend plans (14% Replacing and 19% Decreasing) and fewer plans to Adopt the vendor (5%). The 33% of Global 2000 customers in our sample planning to Decrease spend or Replace the vendor in 2H24 is up from 22% in 2H23.
Jamf: Sharp Decline but Wide Moat Keeps the Vendor Near the Top of UEM
Jamf has seen a Net Score decrease of 17 percentage points since our JAN24 iteration and is also down 7 percentage points since our last second half survey in OCT23. Weakness is especially prevalent CxO respondents, which is down 24 percentage points since OCT23 (N = 53). Despite this worsening trend, Jamf still enjoys a very strong position among United Endpoint Management vendors in our JUL24 TSIS data. Excluding Microsoft, which is a far outlier from its ubiquitous software install base, Jamf holds the highest Net Score among UEM companies and third-highest pervasion score in this survey iteration. Jamf is set to report Q2 earnings on August 7th, after market close.
HubSpot: Seeing Weakness in Critical SMB Segment
In HubSpot’s latest data set, proportional spending breakdowns remain largely in line, but shifts of positive-to-negative spend drove Net Score lower over recent surveys. Weaker spending within the Enterprise Application sector and among SMB customers in particular warrants a negative outlook on the vendor’s data set, in our view. HubSpot is sensitive to pressure from SMBs given their customer demographics with Small and Mid-sized organizations comprising 59% of our HubSpot TSIS data. After the Net Score fell for this cut in 2H22, we saw signs of rebound through JAN24. Since then, elevated levels of churn and Decreasing spend indications have returned to the data set, driving Net Score down over the past two survey periods to 28.9%.
Last quarter, HubSpot reported revenue and billings above consensus, but Q2 revenue guidance came in below consensus and full year sales guidance was not raised. The stock has seen increased volatility since April, when widespread reports alleged that Google was weighing an acquisition offer on the CRM vendor. However, no offer materialized, and with reported hesitations around regulatory approval, Google walked away from the purported deal three months later.
DigitalOcean: Strong Positive Inflection Since Last 2H Survey
Finally, we turn to a SMid Cap company that has received less attention, DigitalOcean. Like HubSpot, the IaaS/PaaS developer platform competes primarily at the lower end of the market and with macroeconomic uncertainty slowing SMB spending, the vendor has suffered from elevated lower spending and high churn. Total customer growth dipped slightly negative y/y in the first quarter while Total ARR growth came in at 12%.
Despite these difficulties, we want to highlight the recent inflection in the data in the JUL24 quarter, which grew 14 percentage points since our last second half survey in OCT23 to reach a Net Score of 3.3%. We caution that this is from a sample of 61 respondents, which may be more subject to fluctuations in intentions, but believe this represents a directional signal that headwinds may be decreasing for the company. DigitalOcean is scheduled to report on August 8th after market close.
Contact the ETR service team if you would like a full copy of this report or would like to trial the data and research for yourself.
Enterprise Technology Research (ETR) is a technology market research firm that leverages proprietary data from our targeted IT decision maker (ITDM) community to provide actionable insights about spending intentions and industry trends. Since 2010, we have worked diligently at achieving one goal: eliminating the need for opinions in enterprise research, which are often formed from incomplete, biased, and statistically insignificant data. Our community of ITDMs represents $1+ trillion in annual IT spend and is positioned to provide best-in-class customer/evaluator perspectives. ETR’s proprietary data and insights from this community empower institutional investors, technology companies, and ITDMs to navigate the complex enterprise technology landscape amid an expanding marketplace. Discover what ETR can do for you at www.etr.ai
This ETR custom survey queried 130 Enterprise Performance Mgmt. (EPM) users, and uncovered that while OneStream has benefited from Oracle sunsetting support for its legacy Hyperion product, it was not as big of an impact on OneStream’s success as originally hypothesized.
When originally crafting the survey, the working theory was that OneStream’s hyper growth benefited from market share leader Oracle’s end-of-life of Premium Support
for legacy Hyperion – and it has – but not nearly as much as we thought. That is why we need data. Although this benefit will likely continue for at least a couple of years to come, the company’s outsized growth was supported by several other factors.
Those factors include: displacement of other legacy players, such as
IBM and SAP (who also announced the end-of-life of its several legacy solutions starting
at the end of 2024), and at least as important, greenfield opportunities in situations when
corporations are using Excel to solve planning and consolidation challenges. We also
believe that OneStream’s opportunity beyond traditional Financial Planning and Financial
Consolidation & Close is significant, as according to our survey, more than half of current
users are already using the platform for Operational Planning that touches all segments
within an organization beyond finance. OneStream’s single integrated solution (and SKU)
with easy-to-use interface plays into this opportunity. Finally, our survey indicates that
while only 3% of current customers use OneStream’s AI solution, SensibleML, almost
40% expect to be using it at some point over the next year and 75% expect to use it
at some point in the future.
The ETR custom survey involved 130 Enterprise Performance Management (EPM) users and found that although the discontinuation of support for its legacy Hyperion product by Oracle has benefited OneStream, it did not have as significant an impact on OneStream's success as initially assumed. Initially, it was hypothesized that OneStream's rapid growth was largely due to Oracle's end-of-life of Premium Support for legacy Hyperion, but the survey did not support this hypothesis. The company's outsized growth was supported by other factors, including displacing other legacy players such as IBM and SAP, and seizing greenfield opportunities, especially in situations where companies are using Excel to tackle planning and consolidation challenges. Furthermore, the survey revealed that OneStream's potential extends beyond traditional Financial Planning and Financial Consolidation & Close, with over half of current users already leveraging the platform for Operational Planning that transcends finance. The survey also indicated that while only 3% of current customers use OneStream’s AI solution, SensibleML, almost 40% expect to be using it within the next year and 75% expect to use it at some point in the future.