Hey Friends,

Goldman Sachs just released a great macro view of the software market. Below are some select slides and commentary from me.

Market has been a crazy roller coaster. As a result most companies have been risk off as they wait and see what happens. Even though the stock market has largely recovered there is still plenty of uncertainty from a macro and political standpoint.

And growth outlook can down as a result of that uncertainty and potential business restrictive policies/laws that were discussed.

And lots of tech companies are asking themselves the same questions...

Valuations look similar to pre-covid, but the top companies have higher revenue multiples while the median company has a lower revenue multiple. Investors are allocating more money to the top companies and driving up prices. While similar revenue multiples between these time periods, the fundamentals (and predictability) look a lot different today...

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When there is more uncertainty, profitability comes in focus. Growth has always been priority number 1, but investors care A LOT more about profitability when uncertainty rises.

Growth is ~2.7x more important than profitability today.

Crazy that it's just 20% growth that gets a company a "significant premium". How the times have changed...

Investors want high revenue growth AND strong free cash flow (efficiency). Those are the companies that obviously trade at the highest premium

What valuation premium does a company deserve? Private companies should look at these and think about where they would fall by the time they go public.

What does it take to IPO in 2025? Here are the metrics of some recent cloud IPOs

Some sectors have much more durable growth (or are beneficiaries of AI).