While Zoom (ZM) posted blowout results and guidance on Tuesday afternoon, other high-growth enterprise software firms reporting this week have collectively delivered a more mixed set of messages.
Slack Technologies (WORK) , which is down 12% post-earnings following a strong run-up from its March lows, is a good case in point.
With a surge in remote work activity serving as a tailwind, Slack comfortably beat April quarter estimates, reported strong user and paid customer metrics, issued above-consensus July quarter sales and earnings guidance and hiked its fiscal 2021 (ends in Jan. 2021) sales guidance. But the company also withdrew its fiscal 2021 billings guidance, citing "ongoing uncertainties surrounding the COVID-19 pandemic."
On Slack's earnings call, CFO Allen Shim said that while some of his company's sales cycles have accelerated thanks to work-from-home activity, others have slowed, particularly in "impacted industries." He also mentioned that churn has risen a bit among clients with less than 100 employees, a group that accounts for about a quarter of Slack's revenue.
"Our pipeline remains very healthy, but on balance, there's less visibility into how IT spending will trend for the remainder of the year, particularly if the economic effects of the COVID-19 pandemic persist or worsen," Shim said.
A day earlier, workflow management software provider Smartsheet (SMAR) and search/logging software provider Elastic (ESTC) shared numbers and commentary that had a thing or two in common with Slack's.
Smartsheet, which is down 24% since delivering its April quarter report on Wednesday afternoon, beat sales and EPS estimates, but missed on billings. The company also issued light July quarter and full-year sales guidance and withdrew its full-year billings and free cash flow (FCF) guidance, albeit while hiking full-year EPS guidance.
On Smartsheet's call, CFO Jennifer Caren attributed the billings and FCF guidance withdrawals to "limited visibility into the back half of the year stemming from COVID." CEO Mark Mader mentioned Smartsheet is seeing "COVID-related softness" among SMBs, which account for 28% of its annualized recurring revenue (ARR), and from verticals such as travel, retail and hospitality. Other verticals, such as life sciences, healthcare, finance and tech, were said to be doing better.
Elastic, which is down 3% since its earnings report was posted, soundly beat April quarter estimates and issued in-line July quarter sales guidance, but issued light full-year sales guidance. Echoing Slack and Smartsheet, Elastic reported seeing demand soften among SMBs and customers in pressured industries, with strength in verticals such as e-commerce, media and gaming partly offsetting such headwinds.
"Looking ahead, our assumption is that we are going to be operating in a difficult economic environment due to COVID-19 with only a gradual recovery over time, which will likely create headwinds on calculated billings over the next couple of quarters," said CFO Janesh Moorjani.
Along with Zoom, e-signature software/services provider DocuSign (DOCU) , which is down a little over 1% post-earnings today after having soared to new highs, mostly had good news to share. Though admitting it's not fully immune to macro headwinds, DocuSign trounced April quarter estimates and issued above-consensus July quarter and full-year sales and billings guidance, while (not surprisingly) saying that remote work activity has led e-signature adoption to jump.
In addition, security software vendor CrowdStrike (CRWD) , which jumped post-earnings on Wednesday, joined a slew of other security tech firms in posting strong results/guidance and stating that efforts to secure the activity of remote workers are providing a sales boost.
By and large, the enterprise software companies that went into this year reporting strong double-digit sales and billings growth are still doing so. But at a time when these companies have bounced strongly from their March lows and in many cases surged to new highs, a lot of them are also making it clear that softer demand from SMBs and/or "impacted" industries is set to weigh on their 2020 growth rates.