Thoughts from Q1/26 On-Quarter Software Earnings

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Thoughts from Q1/26 On-Quarter Software Earnings

RBC Capital Markets, LLC

Matthew Hedberg (Head of

Global TIMT Research)

(612) 313-1293,

matthew.hedberg@rbccm.com

Rishi Jaluria (Analyst)

(415) 633-8798,

rishi.jaluria@rbccm.com

May 14, 2026 Matthew Swanson (Analyst)

(612) 313-1237,

matthew.swanson@rbccm.com Thoughts from Q1/26 On-Quarter Software Earnings Dan Bergstrom (Analyst)

(612) 313-1254,RESEARCH Software fundamentals remain solid but post-print reactions remain dan.bergstrom@rbccm.com

Michael Richards (AVP) volatile (332) 204-5767,

Our view: As we wrap up Q1/26 on-qtr earnings, q/q revenue outperformance decreased slightly to michael.richards@rbccm.com

2.4% vs. 2.9% in a seasonally strong Q4. While ARR/billings beat expectations at a lower level than Simran Biswal (AVP)

(646) 618-6894,

revenue, they were consistent q/q at 2.1% beats vs 2.2% last quarter. As such, we believe software simran.biswal@rbccm.com

fundamentals remain generally solid despite the "AI is killing software" narrative. Perceived AI leaders Max Persico, CFA (Senior

continue to be the safe haven for investors as any blips or messy messaging in battleground names Associate)

(646) 618-6895,EQUITY continue to be pressured. Emerging trends from on-qtr earnings include potential disruptions from max.persico@rbccm.com

the Iran war and rising energy costs globally, more widespread RIFs in the name of AI efficiency, slight

pressure on NRR as renewals remain in focus and a more immediate shift on pricing and packaging in the

AI world. Our focus remains on ideas that can accelerate growth, benefit from AI trends/be relatively

insulated from AI narrative risks, and have idiosyncratic drivers. We come out of on-quarter earnings