Software check in, oh and hiring improving…

Happy Friday. This week felt important. We heard from major software platforms, and the takeaway was not disruption or decay, i’d say the take was durability. Seat growth is holding, Salesforce called that out directly. Large deals are getting done, with Zoom’s $100K customers growing 9%. You would think large orgs would delay deals no?

At the same time, macro data continues to cooperate. Real-time inflation is running near 1.4% Y/Y. Super Core PPI Y/Y ticked lower. That gives the Fed room and lowers the odds that policy becomes the source of instability. That is constructive and something we have been calling out.

Then layer in labor data. White-collar job postings are not collapsing, like not at all, if anything perking up. They are growing in areas people assumed were first in line for replacement. Customer support is growing. That seems pretty AI-able to me, yet the postings are rising.

We know AI will reshape work. But extrapolating today’s capabilities in a straight line and assuming immediate displacement feels too simple.

And finally, a reality check. AI models are powerful, but they are still probabilistic systems with meaningful error rates. The data I shared shows that clearly.

As always, we focus on durability, positioning, and where the world is headed, not just where the headlines are today. The software narrative feels too linear, and we are selectively buying names that have been hit indiscriminately.

Here is the summary if you want just that:

• Block accelerates to +24% growth

• Clear Secure +2 million non health users

• Software developer job opening +11% Y/Y

• Zoom top 10 deals all has paid AI

Let’s kick it off with earnings from a few of our companies that reported this week. Beyond just being portfolio positions, I see these as real-time signals for broader industry trends.

Starting with Clear. Most people know them from the airport, but what’s more interesting is the non-airport segment, which is smaller but growing quickly. They’re expanding their identity verification platform into enterprise use cases like hospitals, Uber, and LinkedIn verification. The story is shifting from airport convenience to becoming a broader identity layer across both the digital and physical world.

Clear’s non-airport enrollments are growing 57%, with roughly 2M quarterly adds outside the airport channel. They now have over 7M paid subscribers in the core business and landed their largest enterprise deal ever. Stock was up +30% on earnings. If our view is correct that AI increases identity complexity, verification becomes more valuable. Clear is positioned at that intersection.

Block also reported. I am a big Block bull, we have owned it twice, this is the second go around, and we are starting to see real execution. So I am happy. You can see in the chart, Cash App gross profit growing 33%, overall gross profit growing 24%, and Cash App inflows growing 16%.

Key is they added 1M Cash App banking actives, deepening wallet engagement. Making them more and more central to users lives.

The second story was they announced a much needed workforce reduction. Not ideal for those involved, but it looks more like post-COVID normalization, they want to reduce layers and allow for them to drive further top line by moving faster and net net more margins.

Guidance calls for continued acceleration. So happy here also.

Here is quick blurb on how Block also posted record net new seller volume and 2019 low churn in Food & Beverage, which grew 16% Y/Y.

Now onto Zoom. They continue to execute well, and it’s becoming clearer that their competitive position is strengthening. Their AI playbook looks like it’s working.

Customers spending over $100K grew 9% to 4,468 and now represent roughly one-third of total revenue. The contact center business grew high double digits Y/Y. So this is not just a “meetings” story anymore. They’re winning with larger customers and expanding into newer segments.

They also hold roughly $1.5B in strategic investments, likely largely in Anthropic. With valuation changes, that stake could be meaningfully higher today. On top of that, there’s a $3.5B buyback in place, which adds another layer to the capital allocation story.

All of their top 10 deals included at least one paid AI seat, and seven of those deals were taken from competitors. That tells you AI is not just incremental revenue, it’s becoming a wedge in competitive displacement. Eric talked about this on the call.

Workday reported this week. We do not own it but interested in how they are functioning.

What we learned was Anthropic, Google, and OpenAI all run Workday. Workday also expanded with Anthropic during the quarter. If AI labs were replacing enterprise software internally, you would not see that. Instead, they are scaling on top of existing platforms.

Next up in software land was Salesforce. They reported steady results and highlighted seat growth. Yes seat growth. They mentioned how Anthropic and OpenAI are customers. So same story for large software players.

They authorized a $50B buyback. That is meaningful support and reinforces the idea that software vendors may be net buyers during volatility. Also how is AI translating to sales. AgentForce is now at an $800M run rate growing 200% Y/Y. Early, but real monetization.

There’s a loud narrative right now that AI is replacing white collar work. And to be fair, some roles will disappear. History shows that clearly. We once had over 1 million switchboard operators. Today we have none. Technology removes certain tasks. That part is real.

But what’s interesting is what the data is actually showing today. According to Indeed, software development job postings are +11% Y/Y. Customer service, sales, HR, and even therapy roles are also positive Y/Y. That runs directly against the idea that white collar hiring is collapsing across the board.

Worth thinking about…

Lets get an inflation check. Truflation is running around 1.4% Y/Y, down sharply over the last year. So real-time inflation is good.

We just got PPI. Month over month was elevated for headline but Super Core PPI Y/Y ticked lower. Historically, that feeds into Core PCE. So in reality this was pretty good.

Lower inflation plus resilient earnings gives the Fed flexibility. Below I show the relationship between PCE and Super Core PPI.

Lastly, if you think AGI is here think again. For now.

The top AI models score around 50% on broad omniscience-style testing. Impressive. But not AGI.

AI is probabilistic and improving. But 50% accuracy is not enough to run critical systems without human oversight.

So this week software earnings are holding. AI is being monetized. Identity is strengthening. Inflation is cooling. The story is more balanced than the headlines suggest.

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About Avory & Co.

Investing where the world is headed. 

Avory specializes in high-conviction equity strategies, emphasizing Secular Growth and Transformation Stories driven by exceptional teams. Data guides decisions. We cater to high net worth investors, family offices, and institutional investors. Note: This information doesn't constitute a recommendation to buy or sell any mentioned securities. Avory is based in Miami, Florida with clients all across the globe.

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Disclaimer: Not a recommendation to purchase or sell any securities mentioned. This is for educational purposes only.