Orlando Bravo Highlights Challenges and Opportunities in Software Sector

Orlando Bravo, co-founder of Thoma Bravo, expressed concerns regarding the current state of software stocks, stating that many are "oversold." During an interview on CNBC's "Money Movers," Bravo noted that a significant number of the approximately 300 publicly traded software companies are struggling with profitability. He emphasized that these companies often trade based on revenue multiples, which he described as "very, very dangerous." As of September, Thoma Bravo managed over $181 billion in assets, focusing primarily on software investments.

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Bravo pointed out that the rise of artificial intelligence (AI) poses a technical threat to traditional software companies. He argued that as AI technologies advance, the value of domain expertise becomes increasingly critical. "There's some jewels in the public markets right now that are worth so much, that have 30 years of domain expertise built into their product," he remarked, highlighting the potential for undervalued companies with deep industry knowledge.

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Thoma Bravo is actively seeking investment opportunities in the software sector, particularly targeting companies that are currently undervalued. Bravo's strategy focuses on identifying firms with substantial domain expertise that may not yet be recognized by the market. He believes that these companies represent significant investment potential, especially in a landscape where many software stocks are perceived to be struggling.

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While Bravo's perspective highlights potential opportunities, some analysts and investors remain skeptical about the overall health of the software sector. Critics argue that reliance on revenue multiples without a clear path to profitability could lead to further market volatility. This skepticism is compounded by the rapid evolution of AI, which may disrupt established software business models.

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In his statements, Bravo underscored the importance of recognizing the value of companies with extensive domain expertise. He stated, "We're very active in looking at a lot of them," indicating Thoma Bravo's commitment to navigating the current market challenges while seeking out promising investments.

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As the software sector continues to grapple with profitability issues and the implications of AI, Thoma Bravo's investment approach may influence market trends. Observers will be watching for further developments in software valuations and the potential emergence of new leaders in the industry.

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• “Most of these 300 publicly traded software companies, they don't have enough profits,” — Orlando Bravo, Co-founder, Thoma Bravo

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• “There's some jewels in the public markets right now that are worth so much, that have 30 years of domain expertise built into their product,” — Orlando Bravo, Co-founder, Thoma Bravo

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• “They trade as a multiple of revenue, and that's very, very dangerous.” — Orlando Bravo, Co-founder, Thoma Bravo

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• “And those companies are really, really cheap right now. We're very active in looking at a lot of them.” — Orlando Bravo, Co-founder, Thoma Bravo

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