Quantifying Macro Uncertainty In Software

“How much are tariffs and macroeconomic uncertainty impacting cloud software demand?”

This week’s SaaS Barometer Newsletter is brought to you by contributing author - Matt Harney. Matt Harney is the founder of CloudRatings and the author of the SaaSletter. Matt will be hosting the Value Creation Summit on July 16th which will cover why better data = better forecasts + returns which you can register to attend by clicking here.

Using a high-frequency top-of-funnel factor from our Cloud Ratings Alto Model, we looked to see if there were any notable variations in buyer demand across a sample of 340 SaaS vendors:

Key Observations:

• Top-of-funnel demand appears unchanged (literally 0.0% change) across our n=340 software vendor sample

• Interestingly, our subset of macro/tariff-sensitive vendors (i.e., e-commerce SaaS) has increased by +5.5% since “Liberation Week.”

• Zooming out from 2025 YTD, the broad trendline of low double-digit % growth since January 2024 is consistent with our “maturing growth industry” characterization of today’s software industry (see also our presentation at SaaS Metrics Palooza 2024)

Macro Commentary From Public Software Companies

We reviewed the post “Liberation Week” earnings and equity research conference transcripts for a *sample* of 19 software companies, 14 of which featured notable commentary excerpted below.

Key Observation: On balance, software management teams are not seeing many quantifiable macro impacts despite clear uncertainty.

The following quote from Samsara represented the most negative macro commentary:

“Q1 FY '26 was highlighted by strong top line growth and continued efficiency gains. After a strong start to the quarter, we experienced instances of elongated sales cycles on some transactions in the period following liberation day in April as some customers prioritize spending on tariff-impacted goods such as vehicles, equipment and other assets. Despite the current macro uncertainty, we're encouraged that a number of these transactions closed in May, that we generated record pipeline in Q1 and that our win rates remain generally consistent and healthy.” - Q1 FY2026 Earnings Call - June 5, 2025

Otherwise, the *observed* impacts have been negligible on average across the public software companies we reviewed.

Q: Why Is Demand Holding Up? → A: ROI

A quote from Freshworks captured why short-term demand has mainly remained resilient:

“But I have not had one customer worldwide, regardless of size, actually say we are not investing because of the macro. What they have said is, I need to make sure that this drives returns for me because I'm putting my neck on the line to drive this investment. And a lot of companies are actually looking to us to be able to invest because they are actually saving money because they're dealing with vendors that are actually more complex in terms of their human capital to actually run their systems, the licensing cost to run their systems. … Our customers see faster ROI, and then they can free up that money to be able to innovate or to put it to the bottom line. And so -- but there haven't been a lot of customers that have said, look, I can't invest with you because of the macro.” - Bank of America Global Technology Conference - June 4, 2025

Business software has consistently demonstrated positive ROI - on average a 41% IRR or 3-Year Total ROI of 278% per this “The ROI Of IT + Software” study. In a downturn, investments in software with clear paybacks will be prioritized (or at least maintained) relative to “softer, unclear ROI” line items (i.e., public relations, brand advertising).

What About AI?

Specific to 2025, AI is a strong tailwind to counterbalance macroeconomic pressures. Our B2B AI Demand Index has captured consistent growth in buyer demand:

However, for most traditional software vendors without a very clear AI winner story, AI contributes to uncertainty, as evident in data from Zylo on declining multi-year contracts, and this quote from Asana’s CEO:

“State of Software + AI” (March 2025) - First Presented At Bowery Capital AGM

Actionable Advice For Operators

I was surprised at the lack of macro impact, which is why you go do the actual work, particularly quantitative work from scaled data.

There is a lesson in this for operators (whether CFO or CRO or CEO):

“Human pipeline reviews can only take you so far. ‘Macro’ and ‘tariffs’ are perfect execuses for sellers, especially B and C Players. You need to be using data at scale - your sellers email inboxes, your call recordings, your CRM - to *really* know if macro is impacting your net new business.” - Guy Rubin, Founder + CEO of Ebsta (revenue intelligence software)

Macro Commentary From Public Software Companies

Our full aggregation of macro quotes is presented below:

Asana:

"So the low end of the guide is definitely taking into account being much more prudent. It reflects not just the trends that Anne called out just now, around what we're seeing, but it actually reflects additional risk and additional macro pressure, which we have not seen yet, but we wanted to provide a guidance range that, at the high end, is reflecting what we see today and then, at the low end, incorporates a potential worsening given there is a lot more uncertainty out there today than when I last guided, which was in March with our Q4 earnings.” - Q1 FY2026 Earnings Call - June 3, 2025

“And so just to be clear, on the 7% to 9% that we guided last night, the low end of that guide incorporates a worsening of the macro in terms of what we're seeing today. And we did call out some trends that we began to see really around April, and I think we're not alone there. I've seen others call out post-liberation day. And some of those trends that we've seen are slightly more elongated sales cycles, slightly smaller lands. Just a bit more buyer scrutiny.” - Bank of America Global Technology Conference 2025 - June 4, 2025

BigCommerce:

“We're keeping a close eye on the macro, certainly, and it's hard to understand the supply chains of many of our customers. Some may presume to be more obvious than others. We've not seen obvious tangible signs yet where we feel comfortable opining on it, but certainly are very consciously aware that there's some exposure there given some of the macro trends.

But to what Daniel kind of alluded to earlier, if you didn't read the press and pay attention to what was going on in the macro, there's nothing obvious in the business that jumps out where you're like, wow, there's uncertainty or any sort of perceived volatility here.” - Q1 2025 Earnings Call - May 8, 2025

BILL Holdings:

“I'll start and then let John add some more color. So I mean, if you look at what we've done to date, we've actually delivered on each that we said we were going to hit. We had to make some adjustments, we said for the fourth quarter based on where we saw the macro. And so I would say that our investments are acting as we expected. There's now a new uncertainty from the macro that we needed to factor in.” - JPMorgan Global Technology Conference - May 13, 2025

Five9:

“In the first quarter, we continued to execute well against a strong pipeline, seeing increased volume of new logo wins year-over-year despite some lengthening of sales cycles on larger deals, which we attribute to the macro backdrop.

From a geopolitical perspective, we are starting to see some resistance in international regions to doing business with U.S. vendors, but we are monitoring this very closely as we are operating in a very dynamic environment.” - Q1 2025 Earnings Call - May 1, 2025

Freshworks:

“We're not directly impacted by the tariffs, but some of our customers are. Our customer base, though, it does not skew towards any specific industry, and it doesn't skew to exporters as an example or industries that are impacted by that. We do have some customers absolutely that have been impacted. But we haven't seen that on a broad way affect sales cycles. We haven't seen it. We didn't see it in the numbers in Q1 at all. And as I said, on the call, as of April, we had not seen anything either. It's neither in the SMB side, nor in the mid-market and low end of enterprise.” - JPMorgan Global Technology Conference - May 15, 2025

“I talk to dozens of customers and they have not mentioned macro as being a major reason why they may not invest. And so I feel like I need a knock on wood just to make sure I'm not chasing myself. But I have not had one customer worldwide regardless of size actually say we are not investing because of the macro. What they have said is, I need to make sure that this drives returns for me because I'm putting my neck on the line to drive this investment.” - Bank of America Global Technology Conference - June 4, 2025

Hubspot:

“Let me start with this, and then I'll have Dharmesh step in on the agent. I'll start with the overall macro question that you have. As we have said a couple of times here, we have not seen significant changes in demand patterns, and that holds true by industry and segment and geography. Across all of those, we're seeing very similar patterns across that board. Now, look, I think there's just a broader narrative that SMBs may be disproportionately impacted by economic downturn.” - Q1 2025 Earnings Call - May 8, 2025

Klaviyo:

“Before turning to guidance, let me briefly discuss the macro environment. While potential tariffs and consumer sentiment are top of mind for our customers and for Klaviyo, thus far, we have not seen a material impact on our business. Klaviyo drives revenue for our customers from their existing consumers, which is typically a highly efficient and profitable growth channel. Should they need to scale back, many customers have told us that retention would be one of the last areas where they would reduce spending.

…As we looked at the back half of the year, we undertook extensive scenario planning and a deep analysis of our business just given the macro backdrop, and that includes looking closely at trends in operational metrics like customer KAV trends, looking at sales cycle length, all of which have remained consistent through the end of April.” - Q1 2025 Earnings Call - May 6, 2025

Okta:

“But as you know, Keith, federal contracts are 1-year deals. And so we have to renew that portion of the business every year. And so given the level of uncertainty, the heightened level of uncertainty that we see there, we're being thoughtful about that. And if you think about my macro comments that I said a couple of weeks ago, DOGE and U.S. federal was a subset underneath that macro umbrella because we do see the level of uncertainty there growing over the last couple of months.

And so we're being thoughtful about that in the guidance that we gave out a couple of weeks ago. So we're excited about it in the long run. We think short-term turbulence because there's uncertainty right now.” - BMO 2025 Virtual Software Conference - June 10, 2025

Procore:

“So I'd like to begin by addressing what's top of mind for everyone. The uncertainties and potential impacts of the tariff policies. First and foremost, I want you all to know that we have not seen any material change in our customers' behavior so far. Clearly, we are carefully monitoring this very fluid situation, and we're staying close with our customers and prospects as it develops.” - Q1 2025 Earnings Call - May 1, 2025

Salesforce:

“If you think about areas like manufacturing or consumer, clearly, how consumers were appropriately thinking about spending was something on top of mind, tariffs, clearly. But then mid-market, small business, we saw good acceleration.” - Bank of America Global Technology Conference - June 3, 2025

Samsara:

“Q1 FY '26 was highlighted by strong top line growth and continued efficiency gains. After a strong start to the quarter, we experienced instances of elongated sales cycles on some transactions in the period following liberation day in April as some customers prioritize spending on tariff-impacted goods such as vehicles, equipment and other assets. Despite the current macro uncertainty, we're encouraged that a number of these transactions closed in May, that we generated record pipeline in Q1 and that our win rates remain generally consistent and healthy.” - Q1 FY2026 Earnings Call - June 5, 2025

Shopify:

“As it relates to -- we alluded to both, and I mentioned just a moment ago that both April and May have been strong in terms of what we've seen in GMV performance. It's obviously a dynamic environment. It's still too early to tell, I think, in terms of where this is all going to play out, both in terms of the quantum and the timing of the tariffs. But again, I would say that we're roughly a month into the escalation of tariffs and we continue to see strength in GMV. But as we look at the guidance we gave in Q2, it obviously assumes continued strong performance.” - Q1 2025 Earnings Call - May 8, 2025

Snowflake:

“I am not seeing any big optimizations plan within our customers like what we saw coming out of COVID with those. But I will remind you, our customers are constantly optimizing.

That may be a little bit, but they're always looking to do things more efficiently, and that will continue. I would say in terms of the macro right now, we really have not seen the impact of anything with the current -- all the news on tariffs and other things today. I think if we would have seen that, we would have saw in the new -- number of new customers. We had a great new customer add, and we had great additions to RPO with this confidence, and that shows the confidence our customers have on making big bets with Snowflake.” - Q1 2026 Earnings Call - May 21, 2025

SPS Commerce:

“Everything going on with the tariffs is very top of mind right now for our customers and is leading to some uncertainty about not only how the tariffs will kind of impact their business and how they should react, but also, will that lead to other uncertainty or headwinds in the macro.

Now all of that said, while it's top of mind, if we look at our information around enablement programs, the pipeline for enablement programs and what we have in the business, we are not yet seeing any decline in the total volume of the pipeline nor the speed at which we're able to move opportunities through that pipeline. But I would say, given all this uncertainty, it's something we're monitoring very closely so we really understand those dynamics. But as of now, not seeing a huge impact.” - Q1 2025 Earnings Call - April 24, 2025

A big THANK YOU to Matt Harney for being the guest author for this edition of the SaaS Barometer Newsletter. If you would like to learn more - attend Matt’s Value Creation Summit on July 16th by clicking here!