Somebody linked an article about SaaS churn earlier. I’m not seeing the original thread, but I want to start a conversation.
This line stuck out to me…
A minority of firms (12.2%) project a 20+ percentage point increase in churn. This type of change is usually due to a massive wave of bankruptcy, shutdowns, or layoffs in a specific industry or set of industries. Companies with vertically-concentrated businesses in adversely-affected sectors expect significant struggles.
To quote one respondent:
“The biggest weakness is our customer environments. We are seeing customers who use our tool getting laid off in entire groups which removes the need for our technology. We also have a number of customers in hard hit industries like airlines and hospitality.”
Who could that be. I’m wondering if it’s Alteryx. I looked at their customer list and saw a good number of airlines, though not so much hospitality.
Even if it is not Alteryx that is being quoted here, who might it be?
In general, how are we to know what companies are going to be affected?
Take Alteryx. Part of me says, “The data people are more valuable than ever to struggling companies. Alteryx will be fine.” Another part says, "Many of Alteryx’s customers have zero revenue right now. Don’t suppose firms won’t cup back.
Take DataDog. Part of me says, “Infrastructure is being used to capacity and needs to be monitored. DataDog will be fine.” another part of me says, “DataDog will lose customers because a lot of the startups that use it will be going out of business.”
Then there are companies like Crowdstrike, Slack, Veeva, and Zoom who we know are seeing increased usage. But these stocks are also up. Are the up too much? Not enough? Who knows?
In short, right now, until the next rounds of earnings are released, we are just guessing. Does this feel like gambling to anyone?