Sub-5% Growth Hits Dropbox, PagerDuty, Zoom and DocuSign

Public software companies including Dropbox, PagerDuty, Zoom and DocuSign now report growth rates at or below 5% in their most recent quarters, according to SaaStr.

Sub-5% Growth Examples

Dropbox posted 0.8% revenue growth last quarter. Stripping out a winding-down product, growth reached 2%. Total ARR increased 0.3%. Management guidance projects revenue decline between 0.4% and 0.9%. The company reports $2.5B in revenue, 80% gross margins and over $1B in free cash flow.

PagerDuty recorded 1.0% revenue growth with ARR flat at $496M. Net dollar retention fell to 97%. Zoom reported 5.5% growth in the most recent quarter and 4.4% for the prior fiscal year. Online revenue grew 2.8%. Enterprise net dollar expansion stood at 99%. DocuSign grew 8.7% after a five-year average of 15% and now guides to high-single-digit growth.

Valuation Shifts

Roughly 85% to 95% of enterprise value in a software DCF resides in terminal value. At sub-5% growth the market focuses solely on whether the annuity remains durable. Software now trades at 22.7x forward earnings, below the S&P 500 for the first time. The IGV software ETF has fallen around 30% from its September 2025 peak, erasing about $2 trillion in market cap, according to SaaStr.

AI Effect on Seat-Based Revenue

Seat-based models assume headcount growth drives expansion and net revenue retention above 110%. AI agents reduce required seats. Anthropic reached $19B annualized run rate this year, up from $9B at the end of 2025. Roughly 75% of new hyperscaler infrastructure spend in 2026, exceeding $450 billion, targets AI. Dropbox guidance for revenue decline illustrates the reversal in progress.

Market Bifurcation

Infrastructure companies tied to AI show different results. Cloudflare guided to 28-29% growth. Snowflake printed 30% product growth. Twilio reached 20%, its fastest pace in over three years. DigitalOcean guides to 19-23%. The split separates AI infrastructure from legacy seat-based applications.