The article also provides an update on the financial performance of various software companies. It highlights the May inflation update, a summary of quarterly reports, and an update on multiples. The author also discusses the correlation between growth and valuation multiple and provides a comprehensive overview of operating metrics. The author concludes by stating that the future of application software in a world of AI agents probably looks a whole lot more like database software.
Key takeaways:
- The traditional SaaS business model, which charges a recurring fee based on the number of users, may be disrupted by AI, leading to a shift towards consumption-based pricing.
- As AI allows customers to do more with fewer people, application software providers may face squeezed margins and lower ACV, prompting a shift to consumption-based models.
- With the rise of AI, the importance of user interface in software may decrease, while the underlying data structure becomes more crucial. This could lead to a convergence of database and application software.
- There is a trend of data platform companies becoming application providers, with applications built more for AI agent consumption. This could significantly increase the value of high-quality data infrastructure.