Q: Your thoughts as to why these software companies are up on a day when others are all down?
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5i Research Answer:
Most large SAAS companies were down meaningfully yesterday after CRM announced a weak quarter. The CSU’s family (CSU, LMN, TOI) also operate in similar fields of software businesses, but the growth engine is dramatically different. The CSU’s entities little no stock-based compensation, and the organic growth profile largely aligns with historical averages of around 3%. SAAS companies fund growth with large spending on marketing to acquire customers, while CSU’s family only focuses on acquiring other sticky software businesses. While Some SAAS get a multiple re-rate due to the expected weak organic growth profile, CSU’s entity stories are largely unchanged.