What 82 Earnings Calls Say About the Health of SaaS and AI

We read through the earnings calls of 82 publicly traded SaaS companies we follow and pulled all the quotes regarding their financial performance. Then we dumped all that data into ChatGPT and asked for a synopsis. Below are the key themes:

Performance was good and AI products are providing a boost. Q3 and early FY26 results show a sector that is not only stabilizing but accelerating in several important ways. Growth is broadening, profitability is widening, and operational visibility looks materially better than it did a year ago. The most striking theme is that the agentic-AI era has moved from narrative to numbers: companies across categories including infrastructure, workflows, CX, security, and vertical SaaS now show measurable revenue impact, higher expansion rates, and rising multiproduct adoption tied to AI-native modules. From Atlassian’s 3.5 million monthly AI users to ServiceNow’s million-dollar AI ACV deals, RingCentral’s agentic voice AI push, and Blackbaud and Qualys explicitly connecting AI modules to future bookings, the shift is real and increasingly monetized.

Backbone software continues to be the most resilient. Infrastructure and platforms with deep data moats like Microsoft, Confluent, ServiceNow, and Atlassian are pulling ahead fastest. Microsoft’s cloud growing 26% to $49 billion with RPO above $380 billion underscores how AI-driven services are expanding wallet share rather than cannibalizing legacy workloads. Confluent’s acceleration in RPO, seven-figure wins, and 70%-plus Flink ARR growth show stream processing becoming a foundational AI runtime. ServiceNow’s blowout quarter with 20%+ subscription growth, record margins, and strength across technology, security, government, and industry workflows is a case study in how AI augments a system-of-record platform. Atlassian showed parallel momentum with accelerating migrations, 26% cloud growth, 42% RPO growth, and the Teamwork Collection driving competitive consolidation and seat expansion. These are the companies benefiting from being the “operating layer” beneath AI transformation.

AI is not killing software, it’s powering the next leg of growth. AI-powered multiproduct expansion is becoming the new growth model across mid-cap SaaS, not just hyperscalers. Procore, Freshworks, Workiva, Q2 Holdings, Paylocity, and Zeta Global all delivered double-digit revenue growth while simultaneously expanding margins, an outcome that was rare in 2022–2023. Freshworks hit Rule of 40 again with 21% operating margins and 27% free cash flow margin. Workiva combined 21% revenue growth with an 860 bp margin improvement, lifting full-year guidance across every metric. Q2 Holdings delivered record bookings and improved mix quality with subscription revenue reaching 82% of total. Paylocity saw strong cross-suite demand across HCM, finance, and IT. These companies show that well-positioned SaaS vendors can now drive both growth and margin leverage when AI features deepen engagement inside existing accounts.

Sector leaders are using AI and disciplined cost structures to unlock durable, profitable growth even in slower-moving end markets**. RingCentral is converting from UCaaS to an AI-led communications platform with triple-digit ARR scale in new products and best-in-class free cash flow. Blackbaud continues its steady mid-single-digit revenue growth but pairs it with high-30s EBITDA margins, double-digit EPS growth, aggressive buybacks, and expanding contract lengths, a picture of a mature vertical champion using AI-enabled efficiency to widen its moat. HealthStream and Qualys likewise delivered record revenue, profitability, and strong retention, showing how highly defensible verticals (healthcare compliance, pre-breach cybersecurity) convert innovation into stable, long-duration economics. Shopify remains the standout in commerce infrastructure with 32% revenue growth, 32% GMV growth, and $507 million in free cash flow, proof that commerce software is re-accelerating as AI improves conversions, logistics, and merchant productivity.

In conclusion. Software is entering a phase of healthier, more predictable, and more profitable growth, driven by three reinforcing forces: AI-native product cycles, platform consolidation, and operating discipline. AI is no longer a top-of-funnel teaser; it is a monetized expansion driver across categories. Systems of record are becoming systems of intelligence. Mid-market SaaS companies are finally getting the margin structure investors spent years waiting for. And even slower-moving verticals are seeing durable uplift as AI reduces cost-to-serve and unlocks new SKU layers. Across this entire set of companies, the through-line is the same: AI is accelerating product velocity, improving customer outcomes, and increasing the operating leverage of the software model.

Thank you for your readership. See more blogs and SaaS data at blossomstreetventures.com. Email the author at [email protected].

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