Hedberg & Jaluria Weekly Software Recap/Preview

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Hedberg & Jaluria Weekly Software Recap/Preview

ear. This week we look forward to

kicking off Q2/26 earnings as we'll be focused on IBM, NOW and PEGA.

• Earnings previews:

○Hedberg's Q2/26 on-quarter software earnings preview; Picking our spots: Software sentiment

has improved since the Q1 earning season with the IGV down 11% YTD vs down 27% on April

10th as the RBC All-SaaS index is at 5.3x FTM EV/S vs 4.0x going into Q1 earnings. Our checks and

recent Bay Area bus tour leave us more optimistic about select areas of software including cyber

consolidators, names associated with data/token flow, infrastructure, as well as select vertical SaaS

names. That said, CIO/CTO spending patterns remain fluid due to Mythos urgency, which could

benefit select cyber names while IBM's negative pre-announcement raises questions about deal

cycles and spending priorities. Given the recent move higher in many names, Q2 doesn't seem

like much of a catalyst while our focus remains on opportunities for 2H upside. Clear AI winners

trade at a premium to the group, while increasingly we find investors looking for less consensus

idiosyncratic ideas. While our checks for high-quality growth software remain positive, we think on-

qtr idiosyncratic ideas such as FFIV and PTC could outperform around earnings.

○Jaluria's 2Q26 On-Cycle Preview: Not Out of the Woods Yet: In our on-cycle preview note, we

provide our updated views on key investor debates in software heading into our first week of Q2

on-cycle earnings, as well as company-by-company previews (starting on pg. 4) for our names with

quarters that ended in June. We are modestly revising our estimates for AKAM and ZD ahead of Q2.

Our favorite on-cycle name into earnings is MSFT, while we favor HUBS, NICE and PEGA longer term.