M UpdateSoftware | North AmericaValuation Views 12/26/23 - Software Marches OnMorgan Stanley & Co. LLCKeith Weiss, CFAEquity Analyst Keith.Weiss@morganstanley.com +1 212 761-4149 Sanjit K SinghEquity Analyst Sanjit.Singh@morganstanley.com +1 415 576-2060 Meta A MarshallEquity Analyst Meta.Marshall@morganstanley.com +1 212 761-0430 Josh Baer, CFAEquity Analyst Josh.Baer@morganstanley.com +1 212 761-4223 Hamza FodderwalaEquity Analyst Hamza.Fodderwala@morganstanley.com +1 212 761-1083 Elizabeth Porter, CFAEquity Analyst Elizabeth.E.Porter@morganstanley.com +1 212 761-3632 SoftwareNorth AmericaIndustry ViewAttractiveSoftware stocks outperform two weeks in a row, up ~2% on average over the last five trading days, with SMid Caps modestly outperforming Large Caps for the week. Entering the final week of 2023, the Software group has performed inline with the Nasdaq, but has materially outperformed the S&P 500 YTD.Assessing Software – Price Performance52 Week HighCompany1 Week1 Month3 MonthYTD1 Year3 YearPrice% BelowSoftware Mean1.8%13.0%19.9%42.6%41.3%-19.7%15.5%Software Median1.7%10.7%19.4%40.7%40.8%-26.0%9.1%NASDAQ1.4%5.4%13.2%43.0%39.7%17.4%S&P 5000.6%4.6%9.6%23.6%22.4%28.5%PerformanceTop 10Short interest %1 Week Price Move1 Month Price MoveYTDRank Ticker12/21/2023Ticker12/21/2023Ticker12/21/2023Ticker12/21/20231AI29.3%SEMR12.1%S59.0%PLTR174.0%2SPT16.7%FROG11.9%ESTC46.3%IOT171.8%3CHGG15.3%ETWO11.0%DOCU42.3%AI162.9%4EGHT12.3%TEAM10.4%PATH39.0%CRWD144.4%5PD11.9%LSPD10.2%ZI36.8%FSLY123.9%6DOCN10.3%OKTA9.8%SEMR35.5%ESTC120.1%7TWOU10.1%DCBO8.4%TEAM32.4%SHOP119.4%8QLYS8.7%WIX8.3%TOST32.3%PANW114.6%9PRO8.6%TENB7.8%BILL32.0%MDB108.2%10AYX8.5%DOCU7.8%DOCN31.9%CRM101.6%Bottom 10Short interest %1 Week Price Move1 Month Price MoveYTDRank Ticker12/21/2023Ticker12/21/2023Ticker12/21/2023Ticker12/21/20231SCWX0.1%BASE-8.0%CXM-20.8%TWOU-81.0%2DCBO0.3%UDMY-7.0%YEXT-13.4%CHGG-55.8%3WKME0.3%AI-6.4%PLTR-11.2%ZI-37.1%4VERX0.5%EGHT-6.1%APPF-10.0%DOMO-29.0%5INST0.5%KVYO-5.9%ORCL-8.8%SABR-26.5%6SWI0.5%ASAN-5.6%ASAN-7.2%ETWO-26.2%7ORCL0.6%CFLT-5.5%LZ-2.1%BILL-23.9%8MSFT0.7%IOT-5.2%VERX-2.0%EGHT-18.5%9KVYO0.7%FIVN-4.2%ADBE-1.8%BOX-16.7%10CCCS0.7%COUR-3.8%SAPG-1.3%DOCS-16.4%Source: EikonAssessing Software – Where Are the Multiples? Morgan Stanley does and seeks to do business with companies covered in Morgan Stanley Research. As a result, investors should be aware that the firm may have a conflict of interest that could affect the objectivity of Morgan Stanley Research. Investors should consider Morgan Stanley Research as only a single factor in making their investment decision.For analyst certification and other important disclosures, refer to the Disclosure Section, located at the end of this report.December 26, 2023 11:58 AM GMTM Update2Exhibit 1:Overall Software Coverage Group Trading at 30% Below the Trailing 5-Year Average...9.4x3.9x7.4xMax at: 17.9xToday at: 7.2x5 year Avg: 10.2x0x2x4x6x8x10x12x14x16x18x20xJan-13Mar-13May-13Jul-13Sep-13Nov-13Jan-14Mar-14May-14Jul-14Sep-14Nov-14Jan-15Mar-15May-15Jul-15Sep-15Nov-15Jan-16Mar-16May-16Jul-16Sep-16N...
