Next week's earnings calendar is loaded with companies that ETR tracks in our spending intentions surveys. This week we highlight Palo Alto and Snowflake, followed by quick data reviews for Zoom, Splunk, UiPath, and Workday. To see the full data sets or analyst reports on these companies, please log into the ETR research platform or request access via a free trial.
Palo Alto: Palo Alto Maintains Sector Pervasion Amid Sector Consolidation in Light of Flattening Spend
Based on data from the most recent APR23 TSIS, Palo Alto's Net Score has declined eight percentage points y/y as more respondents indicate Flat spending intent for 2023 in lieu of previously higher rates of both adoptions and increasing spend indications. Expected churn has also risen to 4.6% of respondents from 2.8% captured in JAN23 and 3.4% in the year-ago period. Pervasion remains elevated and stable within the sector at the 97th percentile. Read the full report here.
Along with the increases in Pervasion, we continue to see indications the company is consolidating market share even in a declining IT spend environment. Palo Alto's share of respondents decreasing spend on or replacing a group of peers continues to increase to 63% up from 51% a year ago.
Snowflake: Customer Acquisition Rates Remain Elevated While Existing G2000 Customers Shift to Flatten Spend
Similar to many vendors in ETR's April 2023 Technology Spending Intentions Survey (TSIS), Snowflake saw a lower Net Score versus January 2023 and April 2022 studies. However, Snowflake continues to lead the entire Database / Data Warehousing sector in Net Score across all respondents (58%) and is trailed closely by Databricks (55%). This strong absolute score for Snowflake is driven by customer acquisition rates which remain elevated and in-line with previous data.
This year-over-year decline in Net Score for Snowflake is driven by more plans to spend 'Flat' with the vendor in lieu of plans to 'Increase' spend. This trend of flattening spend is even more apparent when narrowing down to Global 2000 organizations.
• APR23
o 41% of customers plan to 'Increase' spend
o 32% of customers plan to spend 'Flat'
• JAN23
o 45% of customers plan to 'Increase' spend
o 29% of customers plan to spend 'Flat'
• APR22
o 55% of customers plan to 'Increase' spend
o 21% of customers plan to spend 'Flat'
However, Snowflake continues its momentum in customer acquisition rates, leading all peers in Database / Data Warehousing with the highest Adoption percentage in the sector. Read the full report here.
Moving on to a few quick data reviews for other companies reporting this week, we begin with the ubiquitous video conferencing player, Zoom:
Zoom. In the most recent APR23 TSIS, Zoom captured more than 800 unique respondent citations. Pervasion rates remain elevated for Zoom in all sectors and across all respondent cuts., In fact, Zoom still has the 11th highest Pervasion rate across the entire TSIS vendor universe among unique companies. Despite the impressive entrenchment, the spending intentions within that massive customer base are not growing, according to ETR's data. The aggregate Net Score for Zoom has crossed into negative territory, with all three sectors and key respondent subsamples contributing to the fall, driven by record levels of decline and replacement indications. Read the full report.
Splunk. Splunk is another vendor that is well-represented in our survey, with more than 600 citations in the most recent survey, showing y/y growth. Splunk’s Pervasion rate is also relatively high and growing, up 9% overall y/y to a 34% level this survey. Among Fortune 500 organizations, Pervasion grew 7% up to a very high 58%. Similar to Zoom; however, the pervasion does not translate to spending growth. Splunk’s overall Net Score is down 22% y/y, landing at 27% this survey. Adoption rates have inched upward for Splunk over the past few surveys, but Increase spending indications have inched downward, and negative spending (Decrease + Replace) is creeping higher. Among Fortune 500 organizations, which comprise a quarter of Splunk’s respondents, Net Score dropped 36% y/y. Read the full report.
UiPath. UiPath retains a very healthy spending intentions level in our survey subsample; however, the continued rate of decline negates the relative positioning. Net Score for UiPath across all respondents is 46.6% in this survey. For context, UiPath’s Net Score ranks as the 13th-highest unique company score across the entire TSIS survey universe. However, that 46% Net Score has steadily fallen from 76% three years ago. Although Adoptions remain healthy, Increased spend intent has dropped considerably, and replacement rates have increased to record highs, driving Net Score lower. Overall, despite elevated Net Score levels, the continued rate of decline in both spending and Pervasion metrics, along with dominant competitive positioning by Microsoft within the RPA sector, are ominous trends for UiPath. Read the full report.
Workday. Workday’s Net Score has seen a slight sequential decline, leaving it largely flat with APR22 levels. The company remains at healthy levels overall and outperforms Enterprise Apps peers on an absolute basis. Pervasion continues to see steady gains since JAN22. The mild contraction in Net Score sequentially is noted by a slight uptick in churn indications, which remain low on an absolute basis. This is matched with lower levels of respondents indicating Increasing spend in APR23; however, adoption indications remain at robust levels. The Net Score gains across Financial Management and Adaptive Insights offset the y/y Declines in HCM. Read the full report.
In the data visualization below, all 4 vendors are sorted in order of their Net Score rankings, with UiPath and Workday leading the way.
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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