These are crazy times. The economy has contracted at a record rate of -33%. Yet, the Cloud is on fire during Work-and-Do-Everything-Possible-from-Home. Shopify grew 100% at $3 billion in ARR. Zoom is growing at rates we’ve never seen before in SaaS and Cloud. And Morgan Stanley has predicted Cloud penetration will be pulled forward 5+ years or more.
And yet … the Cloud and the overall economy can’t be disconnected forever. IT budgets come from the cash generated from selling end products to people. And that economy has taken the steepest fall in history.
This week there were 2 quiet flags. Amazon/AWS and Atlassian both had huge Q2’s. But they also both warned of potential lower growth during the rest of 2020. The Cloud is on an unprecedented tear, and Amazon eCommerce and Cloud both were on fire in Q2. The same with Atlassian. Collaboration is on fire since we’ve almost all worked from home, and Atlassian has benefitted along with Slack, Zoom, etc.
But both Atlassian and Amazon/AWS said … Maybe Not As Much Going Forward, Not Forever.
It’s hard to make any firm predictions at all right now. But when two of the blue chips in Cloud and SaaS say darker clouds may be coming … it’s worth paying close attention. Azure and Google Cloud also saw growth begin to slow. Even Shopify isn’t providing guidance going forward.
It could just be a bump. The Cloud is an unstoppable force of nature. But Covid-19 somehow, someway, turned out to be The Best of Times for SaaS and Cloud. But that can’t forever be disconnected from the Worst of Times in our economy overall.
Aaron Levie, CEO of Box, dug into this with us at SaaStr:Enterprise, you can watch the session below. CIOs are spending more on collaboration/work-from-home solutions (they have to), security (they have to), and tools they help them cut costs. But everything else is very, very tight right now. As it should be, when the economy contracts 33%.
Go to Publisher: VC NEWS
Author: Jason Lemkin