Vertical Application Software 2026 Spring Series

J.P. Morgan's 2026 Spring Series report examines the state of Vertical SaaS, highlighting a sector-wide de-rating and a strategic shift toward ROI-driven AI deployment. The report emphasizes that token economics and data stewardship are now the primary factors in customer architectural decisions.

Key Takeaways

• 1.AI token costs have become the central focus of customer conversations, driving architectural shifts toward more selective, ROI-oriented usage.
• 2.Vertical SaaS companies are de-rating from sales-based multiples to profitability-based multiples as AI proliferation increases concerns about terminal value and growth defensibility.
• 3.Vertical software vendors are optimizing for 'design-time' AI reasoning while minimizing expensive runtime token behavior for repeatable transactions.

Table of Contents

• TMC Takeaways
• TMC Main Themes
• PTC (PTC, UW)
• SS&C (SSNC, N)
• CoStar Group (CSGP, OW)
• Tyler Technologies (TYL, OW)
• GoDaddy (GDDY, OW)
• Bentley (BSY, N)
• Pegasystems (PEGA, OW)
• CCC (CCC, UW)
• Q2 (QTWO, OW)
• Intapp (INTA, OW)
• Alkami (ALKT, OW)
• LegalZoom (LZ, OW)
• Sector Overview and Performance
• Valuation
• Coverage De-Rated From Sales to Profitability Multiples
• Key Themes in Vertical Software
• Revenue Growth and Profitability
• Top Picks for 2026
• Earnings Recap
• AI Mentions

Document Preview

Page 1 of 5

Subscribe for full accessStart Free Trial