PROS, Global-E, SPS Commerce Stand Out As Tariffs Reshape Software Spending Priorities: Analyst

Needham analyst Scott Berg is taking a look at the software sector following the Trump administration’s reciprocal tariffs announcement on all imported products.

Much of the companies Berg covers have traded 25% lower or more over the last month. Companies are beginning to tighten their overall budgets/spending.

Given the potential impact on margins, some software players could be impacted by increased budget scrutiny and elongated sales cycles as prospects evaluate their overall spending, driving less demand for their product/service.

However, other companies are expected to see a positive impact on demand from tariff volatility. PROS Holdings PRO, for example, is an AI-infused pricing optimization platform that works with airlines and business-to-business industries that are heavily manufacturing-based. These include automotive parts, chemicals, consumer goods, industrial distribution, and manufacturing.

Tariff volatility could be a general tailwind to demand for PROS, Berg notes.

Also Read: Taiwan Semiconductor Stock Tumbles As Tariff Fears Spark Global Tech Selloff

Another company to note is Global-E Online GLBE. It offers an interesting double-edged sword scenario as tariffs could benefit merchant interest or face volume headwinds as consumers have less purchasing power.

While tariffs could serve as a headwind to cross-border purchasing, especially as the US Federal government considers the de minimus exemption an opportunity for further change, the company’s limited history shows the impact is almost negligible for several reasons. Brexit experienced minimal effect on volumes in and out of the UK. The company’s fast-growing multi-local solution is also a good example of how brands can utilize the platform to reduce their exposure.

Berg would expect a more dynamic tariff environment to be relatively net neutral to SPS Commerce, Inc’s SPSC overall business. The impact on transactional items or even a tailwind should be minimal, and supplier changes should be minimal. Marketing software vendors should have minimal to no real effect. Revenue models are usually tied to the number of consumer profiles stored and marketed to, not the number of transactions or GMV volumes.

Similar to SPS Commerce, certain marketing software companies don’t have direct exposure to the number of sale transactions or GMV for these respective customers. They include: Braze, Inc BRZE, HubSpot, Inc HUBS, Klaviyo, Inc KVYO, Thryv Holdings, Inc THRY and Zeta Global Holdings ZETA.

The number of customer profiles predominately drives the revenue model for the marketing components of these platforms. While Berg would expect sales transactions for end consumers to fall at many retail merchants, the size of the merchant’s customer pool may not be very different, which would not change the cost these merchants pay to the software vendors.

On the other hand, a scenario exists where these merchants need to increase their outreach to customers to spur incremental sales, which could drive the usage of more transaction channels like SMS and WhatsApp.

Read Next: