Software's Resurgence: Scott Martin on WDAY Acquisition Talks, CRM & ADBE Strengths

year to date. Let's go deep on the software space and our tech spotlight. Joining me right now, Scott Martin, Senior analyst, Kramer Capital Research. I'm so glad you're with us because we've gotten that possible deal with Silver Lake. Making a bid for workday. It gave a big boost to workday, was up 1,718% yesterday. And Barron's reporting this kind of interest from private equity circling could really help. The whole software group, which has been in somewhat of a SaaS pocalypse at times. Some of your thoughts on Silver Lake and Workday do we haven't heard from the companies to really know whether or not it's 100% true? Yeah. Nicole, thank you very much, first and foremost. Clearly, this is the kind of rumor. You know, it is still a rumor like you said, that people can buy because it proves, you know, this is the rumor that proves a couple of truths. First and foremost, private equity has got a lot of dry powder on the table. And those deep wallets could not find a way to deploy it. This is their chance. They've been waiting for a moment like this somewhere, and I guess it's SSSAS names software was beaten down to doomsday levels. Apparently that was grossly overdone because in the event that deep pockets go for this, clearly there's a great business and we can talk about why. But, you know, I think realistically software as a service people sold it for a reason. But it was the wrong reason. And now big buyers are coming in. Yeah. I mean, it really could be viewed as a price floor, maybe even for other potential takeout candidates. But tell me why you think there is such an interest here in workday in particular. Well, workday in particular, had that magic sweet spot of being really beaten down to a level. You know, right now it's still at five times sales. Forget about profit for a strategic buyer, that's a really attractive level because they can do a whole lot of things with that. But the business itself is not going away. I mean, workday, that company is still growing. It's just no longer a hyper growth name like the AI names that everyone's grabbing instead. Yeah. And I look at some of the other names in the group, everything from Salesforce, which is down over one year, 16%, ServiceNow, down 27%. And there's so many others, Adobe and Procure and UiPath and GitLab, so many names here. But does it bring some confidence to the group overall as an investor of of this group? This group? I think it brings tremendous confidence because like you said, that floor is there, but it also brings opportunity because a lot of investors watching this were sleeping on the opportunity that maybe these names will not go all the way. They're never going to be trillion dollar giants. They don't need to be because some trillion dollar China is going to buy them at the right price. And so we can take this workday, you know, proposed deal work the comps and find out what's worth buying out there. The concern was that new AI tools would make some of these software names obsolete. Did you find that to be true or have merit? We at Cramer never really believed that because these are great companies. And even if the direct to consumer or direct to human enterprise trade softens a little bit, you know, on the agentic platforms, there are more agents theoretically than people who can subscribe to these accounts. And that's where these companies, the smart ones that make the transition to the agentic universe, that's where they're going to make their real money, and that's how they're going to survive and thrive. Tell me about some of the names that you like in the group, the names we like taking workday as our benchmark here. Five X sales. So run the list and you find that Adobe Intuit CRM even could be in play at the right level. The problem with these big names is Silver Lake, who's rumored to be buying workday. They're only $100 billion company, so they don't really have the money to reach out and buy, you know, a $120 billion, $200 billion company. They've got to think a little bit smaller, starting with, I think Adobe is the biggest it's going to get. They could be in play at the right price. Otherwise, DocuSign, DocuSign, we ran the math. It could be worth $83 a share just as a takeout bid. Yeah. I was thinking how Silver Lake helped to turn around Dell. Right. Well, heck yeah. And that's the story is they buy cheap, they turn it around. They're not thinking about current price to earnings ratios because they're looking at this as a fixer upper. And what's your big picture on some of the other names. There are some that you like more than others. As you mentioned, you just mentioned how you liked into it and Adobe and Salesforce. Which ones do you think may be more in trouble or less interesting, more in trouble? You get me to name my least favorites, anyone who has perversely held up a little bit better lately, names like Fico was such a darling for so long, and now it's taken a little bit of a step back. But even now, nobody's going to buy that company because it's still a little expensive. When we think about software cloud and all of these names, you have a high conviction overall and what's going to drive them for five years or ten years. Cramer has the highest of all possible convictions on software simply because this is where disruption happens. This is where companies throughout the world get efficiencies, squeeze extra productivity out of every dollar and join the modern world. So we've seen this cycle again and again. Smart names will keep evolving. Other ones do get bought out at a certain level and they go away. And what is it about Salesforce that you like? Salesforce? We think Salesforce is being slept on for just the reasons you told me earlier. You know, AI is disrupting this and suddenly no one's going to need their CRM system. But that's not really true. All the agents build on your existing CRM. They build on your history. They can't simply import that. And ultimately, Salesforce will figure out a way to monetize that. And then the other two names you had, Intuit and Adobe, care to share why you like either of those or both? Yeah, yeah. I think we love Adobe because Adobe was very early in the entire subscription as software model, and they've kept evolving their entire ecosystem so they can continue to upsell every customer, continue to move the money, and more importantly, monetize the existing dominant position in creativity software. Intuit similar position, but in accounting. And the final thought is when we think about AI disruption, like I said, this group, people were worried that the AI tools would in fact be disruptive and maybe make these less worthy. Is that overblown? How much? So I think it's overblown. If I had a number, I'd 10 to 15% discount on all these names because of the AI disruption hypothesis. And and anything that you'll be watching with Workday and Silver Lake, you want to make any projections or you want to stay on the sidelines up to you. Well, I think, you know, if I were betting Silver Lake has seen the headlines and how wonderful they are. And I think if Silver Lake was not actively talking to the company, they probably are now. Scott Martin, wonderful to speak with you today. We really appreciate