Technology-Weekly Reboot – Software's Confidence Crisis

Summary of Key Points from the Conference Call Industry Overview - Industry: Technology – Software & Services in Europe - Current Sentiment: Shift from AI-fueled optimism to concerns about disruption, despite resilient long-term fundamentals in the software sector [1][1] Company-Specific Insights RELX - Current Position: Trading at 50% off its highs, but well-positioned to navigate market nervousness - FY25 Results: Initial piece of valuation multiple recovery; EPS forecasts increased by 1-3% based on updated buyback assumptions - Valuation: 12.7x FY27 adjusted P/E; rated as Overweight [2][2] Adyen - Growth Guidance: FY26 growth guidance disappointed, raising questions about long-term growth potential - Investor Confidence: May take time to restore confidence, but long-term opportunities remain positive; rated as Overweight - Recent Performance: Slightly weaker 4Q and 2026 guidance noted [3][3][4] Capgemini - FY25 Results: 4Q performance better than expected with approximately 4% organic growth versus 2.2% expected - FY26 Guidance: Weaker free cash flow (FCF) guidance at €1.8-1.9 billion compared to market expectations of around €2 billion due to restructuring impacts [5][5] Dassault Systemes - Performance: 4Q25 results missed expectations on both top and bottom lines - FY26 Guidance: Revenue growth guidance of 3-5% at constant currency, which may lead to consensus cuts of approximately 2 percentage points [6][6] Other Companies - Results were also reported for SoftwareOne, TeamViewer, and Tieto, but specific details were not provided in the summary [7][7] Market Dynamics - Investor Sentiment: The software sector is experiencing high volatility, with a notable decline in confidence attributed to concerns over sustainability and terminal value of companies in the sector [1][1][4] - Valuation Trends: The software and information services sector is currently de-rated, reflecting broader market concerns [4][4] Forward Guidance - General Trends: Companies are providing varied growth forecasts, with some expecting moderate growth while others face challenges in meeting market expectations [14][14][16][16] - Adyen's Long-Term Ambition: Aiming for annual net revenue growth of approximately 20% post-2026, with EBITDA margins expected to exceed 55% by 2028 [16][16] Conclusion - The software and services sector in Europe is currently facing a confidence crisis, with mixed results from key players. While some companies like RELX and Adyen show potential for recovery, others like Capgemini and Dassault Systemes are grappling with restructuring impacts and disappointing guidance. The overall sentiment reflects a cautious outlook amidst high volatility and investor concerns about long-term growth sustainability.