SMB Business Activity Is Slowing
Listening to Software EPS calls, it definitely feels as though business activity is slowing at the SMB-end of the market.
My view is that this has been going on for over a year, but price increases can no longer mask the reduction in volume/usage/seats/subscriptions. A slowdown is to be expected. Many SMBs are zombies, they exist(ed) only because of the ultra-low interest rate environment of 2020-2022.
Two-plus years of elevated rates is more than many small and medium-sized businesses can financially withstand. Ditto for many consumers, which is why BofA continues to report higher NCO rates for its Consumer portfolio.
With the recent spate of corporate layoffs and lack of hiring, I can’t imagine that Enterprise demand will take a turn for the better in the March quarter. The question is, how many companies will miss their lowered March Q guidance?