Reports of the death of SaaS may have been greatly exaggerated.
Shares of software as a service companies Atlassian, Twilio, and Five9 soared in out-of-hours trading after reporting earnings beats on Thursday.
Each of the companies cited AI as a reason for accelerating revenue — the very same technology that has pummelled their share prices this year over fears that companies could use AI to build the software they sell.
Atlassian’s share price was up as much as 25% in premarket trading on Friday morning, Twilio rose as much as 20%, and Five9 gained 16%. All three pared those gains a little as the market open approached.
Revenue at Atlassian, which provides project collaboration software, was up 32% year over year. Twilio, which provides cloud-based communications tools, reported revenues up 20% compared to last year, while contact center company Five9 saw revenues grow by 9%.
While the results were strong, it doesn’t mean the so-called SaaSpocalypse is over, Kate Leaman, chief market analyst at AvaTrade, told Business Insider.
“Last night’s results from Atlassian, Twilio, and Five9 won’t kill the SaaSpocalypse narrative entirely, but they do put a significant dent in it,” Leaman said.
The company’s results and soaring share prices are “not the behavior of a sector in structural decline,” she added.
Twilio CEO Khozema Shipchandler told Business Insider’s Rosalie Chan that he sees AI as a catalyst for business because Twilio is more of an infrastructure company, and that people can’t vibe code much of what it does.
It’s similar messaging from the leaders of other software companies whose share prices have been battered by SaaSpocalypse fears.
Dan Rogers, the CEO of work management company Asana, previously told Business Insider that its software can help businesses manage AI agents, driving up demand for its software. Asana’s share price is down 51% since the start of the year.
‘The losers are still out there’
Investors in Atlassian, Twilio, and Five9 appear to have bought the AI-boosterism argument.
“All three pointed to AI adoption as the reason enterprise customers are signing larger and longer commitments,” Leaman said.
“Atlassian’s AI-powered service products crossed $1 billion in annualized revenue. Twilio’s existing customers are spending more, not less. That is a meaningful shift from the doom-and-gloom thesis that AI would cannibalize SaaS spending,” she added.
While those three companies have shrugged off some of the SaaSpocalypse fears for the moment, they are just a small slice of the software market.
Investors will be watching closely when Salesforce, whose shares are down about 30% since the start of the year, and other software companies report earnings later this month and next.
“The SaaSpocalypse fear was never really about the whole sector disappearing; it was about a brutal bifurcation between winners and losers,” Leaman said.
“Last night showed us some of the winners, while the losers are still out there.”
