First quarter to be difficult to call for many U.S. software firms - Barclays

Qualtrics International

19/04/2022 12:32

** Barclays predicts a difficult first quarter to call for
many U.S. software companies as the brokerage continues to see
currency and macro hardship as well as tougher comparable-store
sales (comps) ahead
    ** "We are not sure how much of this more negative sentiment
will show up in Q1 results yet, but there seems less certainty
in the overall outlook," Barclays says
    ** Given increasing macro uncertainties, Barclays'
value-at-risk survey points to a moderating environment for the
current quarter and outlook, not only in Europe
    ** It believes the billings setup is favourable for
Qualtrics  XM.O , expecting a mid-to-high single-digit beat to
both billings and revenue, as well as growing excitement from
management around cross-sell opportunity due to acquisition of
Clarabridge
    ** It expects Datadog  DDOG.O  to have another quarter of
rapid growth with Q2 guidance in line with prior guides and no
currency hardship as the stock prices in U.S. dollars
    ** However, Barclays is more reserved on Microsoft  MSFT.O ,
  citing harder comps and reseller checks, as well as less
optimistic estimates for the coming quarter, but sees more
auspicious forecasts from software Teams, Azure and Intelligent
Edge setups
    ** It also flags Easter Europe revenue exposure for
Digitalocean  DOCN.N , Confluent's  CFLT.O  cloud growth
dropping below 200% year-on-year without more sequential
revenue, and Paycom Software  PAYC.N  and Ceridian HCM  CDAY.N 
to face much tougher comps from Q2 onwards

 (Reporting by Dina Kartit)
 ((dina.kartit@thomsonreuters.com))