Market Indicators Maintain Their Dip Down from Q1 Highs
After a significant surge in positive demand sentiment in Q1, when more than half of CEOs reported demand accelerating, sentiment turned more negative in Q2. Q3 has seen a modest improvement in the portion of CEOs reporting demand acceleration, back up to 40% (which, interestingly, matches sentiment this time last year).
Perhaps more important than overall demand, of course, is the ability to capture that demand. Here, too, sentiment has fallen across the board from Q1 highs. In general, sentiment around pipelines and deal volume remain high, with a majority of CEOs reporting them as better than last quarter. However, indicators of velocity continue to be a concern, as an increasing portion of CEOs report funnel progression worsening with each quarter.
This flattening of market sentiment is deepening a shift among investors and CEOs back toward a heavier emphasis on EBITDA relative to growth. The year started with CEOs seeing investors split between growth and EBITDA, and widespread optimism that investments would drive growth. As the year has progressed, that optimism is hitting the stark reality of weaker-than-hoped-for demand, and investors are intensifying their push for efficiency to drive valuations.
Some Succeeding, Some Not, in the Wavering Market
We find three fairly distinct organizational performance profiles.
- Expecting to Miss: About one-fifth (22%) of CEOs in the survey are expecting to miss – they are both revising their revenue forecasts downward, and expecting to fall short of their margin targets.- Expecting to Make: Roughly the same size as the “expecting to miss” group, these CEOs expect to make both their revenue forecast and their EBITDA margin targets for the year. This group has planned and executed right in line with its year-end projections.
- Expecting to Beat: More elite in that it only makes up 13% of CEOs, this group expects to beat expectations across the board. They are revising their revenue forecasts upward and at the same time expecting to exceed their EBITDA margin performance targets.
With one quarter remaining in the calendar year, CEOs and commercial leaders find themselves seeking the right strategies to close the year strong. In pursuit of this, they are focusing their attention on three areas: spend management, growing from the base, and refocusing commercial teams.
Our full report goes into more detail on each of these. Download it here.
_________________________________________________________________________________________
Explore the full set of benchmarks collected this quarter below.