Software stocks set new records despite earnings, pandemic

Published August 4, 2020

You might have missed it, but amidst the current political-M&A-pandemic-election-disinformation news cycle we find ourselves in this week, SaaS and cloud companies reached new public market records.

Yesterday, the Bessemer-Nasdaq cloud index closed at 2,035.54, a new record finish for the basket of software companies. And, today, the index broached the 2,040 mark before ceding some ground.

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What matters for our purposes is that with a good chunk of the Q2 earnings cycle behind us, software companies are not only holding onto their gains from earlier in the year, they are managing to add to them, albeit modestly. Of course, valuation expansion during earnings season could still lead to gently falling multiples; as companies grow, if their shares gain value at a slower pace, their price/sales ratio can lose ground.

Regardless, for our purposes it’s notable that recent public market gains are not dissipating. Tech valuation boosts have helped major American indices regain ground lost early in the year, and Q2 earnings were a possible threat to prior progress. So far earnings-related dents are thin on the ground.

So, what’s going on? Why are SaaS and cloud stocks doing so well? Leaning on notes from two VCs — Jamin Ball from Redpoint and Mary D’Onofrio from Bessemer — we can unspool recent valuation highs.

SaaStr postpones annual conference as county officials discourage large gatherings

Published March 6, 2020

SaaStr, the venture firm that puts on the largest conference for SaaS companies, postponed its SaaStr Annual 2020 conference today amid concerns from local and national officials around large gatherings in light of the COVID-19 virus. The event was scheduled to take place next week.

On March 5th, Santa Clara County issued updated guidelines that included, “[Minimizing] the number of employees working within arm’s length of one another, including minimizing or canceling large in-person meetings and conferences.”

Company founder Jason Lemkin said his team was prepared to go forward and had put stringent safeguards in place. “We put in place health and safety measures no one else in the industry equaled, but once the County made its statement, we needed to reschedule,” he told TechCrunch.

They outlined the health guidelines for the event in an article on the company website earlier this week, including not allowing anyone from a hot zone to attend, passport checks to enforce that, temperature checks and more. As Lemkin tweeted:

A reminder: we’ve designed SaaStr Annual to have the more stringent health & safety events of any event:

– no handshakes
– wash before every session
– thermal scanning
– lower density, & comfortable spaces for calm discussions

More:https://t.co/iL096ZwnWT

— Jason SaaStrAnnual.com Lemkin (@jasonlk) March 2, 2020

The event will now be folded into the company’s fall conference, which they say will be even bigger now, while replacing the company’s annual Scale conference. “Following that [guidance from Santa Clara County] and guidance from the CDC, and the growing escalation of the Covid-19 outbreak around the world and in the United States, SaaStr Annual must now be rescheduled and merged with our existing fall event into a new, less formal ‘SaaStr Bi-Annual’ to take place in September 2020,” the company wrote in a statement.

Lemkin expressed frustration with authorities today on Twitter about the lack of leadership on this:

Where was leadership from cities & convention centers?

Why did everyone ignore us weeks back and mock us when we asked for help?

There is a lot of noise today and I think it is very possible to put on an event far safer than Disneyland or the airport

But not without leadership

— Jason SaaStrAnnual.com Lemkin (@jasonlk) March 6, 2020

The event included some of the biggest names in SaaS, from Jennifer Tejada of PagerDuty and Aaron Levie of Box and many more. It’s an event that’s designed to help SaaS companies of all sizes discuss the issues facing them, in one place, with panels, interviews and sessions. Many other tech conferences are being cancelled as well, including SXSW.