EquityResearch12April2019COREBarclaysCapitalInc.and/oroneofitsaffiliatesdoesandseekstodobusinesswithcompaniescoveredinitsresearchreports.Asaresult,investorsshouldbeawarethatthefirmmayhaveaconflictofinterestthatcouldaffecttheobjectivityofthisreport.Investorsshouldconsiderthisreportasonlyasinglefactorinmakingtheirinvestmentdecision.PLEASESEEANALYSTCERTIFICATION(S)ANDIMPORTANTDISCLOSURESBEGINNINGONPAGE58.Restricted-InternalU.S.SoftwareTheQ1EarningsGuideSeasonallySmallQuarterAfterBigRun:WearenotsurewhethertheQ1earningsseasonwillnecessarilyprovideashorttermcatalyststoextendthestrongsoftwareperformanceyear-to-date(21%vs.S&P500of15%).Q1isseasonallythesmallestquarterandSaaSvendorswillalsosufferfromtheQ4compoundingeffect(morerenewalsinQ4,opticallyimpactingQ1).Withthatinmind,theenddemanddatapointsfromourUSVARsurveyremainupbeatwhichshouldhelpmaintainhighinterestinthespace.Finally,wealsoexpectmorecompaniestodiscussARRandRPOmetrics,whichissomethingthatisstillnewtomanyinvestors.VARSurvey–SurprisinglyBetterOutlook:Oursurvey(seeMarchVARSurvey,12Apr2019)suggestshealthyQ1softwarespending.Thebiggersurprisethoughistheincreasedconfidencefortheshortandespeciallylong-termoutlook.Thisseemsunusualgiventhatwearestillatthebeginningoftheyearandinalighterquarter.WeseethisasapositivesignthatUSenddemandremainsveryresilient.Lookingatindividualcompanyresults,wenotethatMSFTresults,despitetoughcompsremainpositive.CTXSshowedanotherquarterofmoderation,andSYMCimproved.StockPicker’sMarketInQ1:GiventhatQ1isasmallerquarterforsoftwareweneedtolookatspecialsituationstoidentifynameswithafavorablesetup.VeryconservativeguidanceshouldhelpFive9.PaycomwillbenefitfromthefilingsrequiredaroundtaxseasonandoftenseeslargerthanexpectedQ1benefits.Lastly,simplydeliveringasolidQ1shouldhelpTalendcontinueitsrecoveryjourney.SpecialAttentionForSomeNamesNeeded:WithrecentmanagementturnoverandslowingeconomicactivityinEuropewewouldbecautiousonSAPintheQ1earningsseason.ThechanneldatapointsforCitrixcontinuetomoderate.Lastly,wehope...
