UBS Getting More Positive On Software: ServiceNow, Splunk, MINDBODY

UBS analysts led by Brent Thill shared their key takeaways from the second day of their four-day UBS Software Bus Tour, in which they met with six public and private software companies, including ServiceNow Inc NOW, Splunk Inc SPLK, MINDBODY Inc MB and Autodesk, Inc. ADSK.

The experts left the meetings with four main themes.

• 1) The talent hiring market is becoming more of a buyers' market, as the private market cools off.
• 2) Amazon.com, Inc. AMZN’s AWS still is “the runaway favourite among public cloud vendors,” although Microsoft Corporation MSFT’s Azure also gets some interest.
• 3) “'SaaS rules' with the increased commitment to cloud only further accelerating acceptance”
• 4) All of the vendors visited said overall demand trends were positive, while they did not point out macro as an issue.

From a company-specific standpoint, UBS’ analysts left feeling most positive on ServiceNow, Splunk and MINDBODY, due to an increased size of the opportunity($60 billion TAM), a sustained ramp in partner activity, and robustness of the overall pipeline, which includes a “step- function-like increase in large deal sizes” to $5-$10 million.

UBS has Buy ratings for ServiceNow, Splunk and MINDBODY, and a Neutral rating for Autodesk.