Technology – Software & Services_ Weekly Reboot – Window into 2025 IT budgets

Summary of Key Points from the Conference Call Industry Overview - Industry Focus: Technology - Software & Services in Europe [1][2] - Market Performance: The coverage was down approximately 10 basis points, outperforming the market by about 170 basis points. Notable performers included Temenos (+7%) and Fortnox (-6%) [1][2]. Core Insights - SAP SE 3Q24 Reseller Survey: - Cloud revenue growth is accelerating, with an overall growth forecast raised to 26% for 3Q24 [1]. - IT budget growth for 2024 is stable at 3.4%, with an initial view for 2025 at 3.6% [1]. - The survey indicates modest acceleration in IT spending, but near-term uncertainty remains due to lower CIO confidence regarding long-term outlook [1]. - US Tech 3Q24 CIO Survey: - Shows initial signs of a more favorable 2025, with a modest acceleration of 24 basis points [1]. - Increased spending on Generative AI is expected to unlock additional IT budgets, although there are still wavering near-term indicators [1]. - Microsoft's Position: - The company is well-positioned to capture market share as workloads transition to the cloud and to benefit from Generative AI spending [1]. - Collaborative Work Management: - Strong share gains for Microsoft and Smartsheet, while Atlassian/Trello experienced share losses [1]. Company-Specific Insights - Palo Alto Networks: - Positive outlook following a meeting with CEO Nikesh Arora, highlighting traction with larger platform deals and AI-enabled efficiencies that could enhance margins over time [1]. Additional Important Information - Price Performance: - Various companies showed different price performances over the last week, with SAP and Temenos being notable mentions [4][5]. - Company Ratings: - Morgan Stanley's coverage includes several companies with ratings ranging from Overweight to Underweight, indicating varied investment sentiments across the sector [2]. - Upcoming Earnings Reports: - Key upcoming earnings reports include SAP, Temenos, and others scheduled for the next few weeks [9][10]. - Forward Guidance: - Companies like Adyen, Capgemini, and others provided guidance for FY24 and beyond, indicating expected revenue growth and margin targets [12][14][16]. This summary encapsulates the critical insights and data points from the conference call, providing a comprehensive overview of the current state and outlook of the technology software and services industry in Europe.