The good news from tech’s earnings season, so far, is that the ad market appears to have recovered a lot from the worst of the downturn. But that’s likely not true for enterprise software. While we haven’t yet heard earnings updates from most enterprise software firms, some of those who have reported suggest that business remains weak, thanks to a software spending pullback by corporate America.
It’s no wonder that the enterprise software sector has been a tech disappointment this year. One proxy for software as a service stocks—the Bessemer Venture Partners Cloud Index, which tracks 71 software firms—is up just 15% this year, much less than the Nasdaq 100 Technology Sector Index, a broader basket of 38 tech firms, which is up 40% (see chart).
