Headcount, Not Pipeline On Sept Quarter EPS Calls
I will be listening for headcount commentary on September quarter earnings calls.
Pipeline rhetoric is easily fudged by management teams during EPS calls. To truly understand sales pipelines you need to be in the Op Reviews and understand the nuances of time-to-signature for the 20% of deals that drive 80% of the results. Management’s headcount commentary is more difficult to fudge. You are either hiring, firing, or holding headcount steady.
My sense is that 60% of Technology/Software/Internet companies are holding headcount flat/ not backfilling natural attrition; 30% are trimming headcount or taking more aggressive RIF action; 10% are actively hiring. Don’t hold me to those exact percentages.
If everything is so wonderful, why aren’t more Technology companies hiring? AI is not the answer. The answer is that demand is not so hot for most companies. In addition, the cost of debt capital remains high. Many small businesses are rolling over as they can’t afford to roll their debt over as notes issued 5 years ago mature. High prices are hurting the consumer. This is a macro headwind for the largest Technology companies including Google, Meta, Apple, Microsoft and Amazon to name a few.
Listen to the EPS call prepared remarks for headcount commentary. Check the quarterly EPS presentation for headcount data. Many IT Services companies will disclose headcount. Software and Internet companies are less forthcoming.