Why we’re doubling down on cloud investments right now

, and focuses mostly on growth investments in SaaS and cloud business. Years from now, people will reflect on the COVID-19 pandemic as a watershed moment for society and the worldwide economy.

Wearing a mask might be as common as owning a phone; online, telemedicine and telework education will be more of a standard than a backup plan; and for the international economy, the cloud will have changed the underlying facilities of companies and whole markets.

COVID-19 is a turning point for the cloud and cloud company creators. For its computing power and as a delivery model of software, the cloud has been welcomed as an option to lots of challenges that services face during today’s financial recession and recovery. Not only is the cloud industry more resistant than other industries, however the cloud design offers organisations an appealing future in the age of social distancing and beyond.

Our company believe that once creators find shelter in the cloud, they’ll never ever return.

Cloud’s resiliency amid historical volatility

Over the past years, there’s been an enormous market shift from on-premises to cloud, as 94% of business use a minimum of one cloud service today. 2020 was currently a turning point year for the cloud industry, as aggregate SaaS and IaaS run-rate profits each crossed $100 billion, and the BVP Nasdaq Emerging Cloud Index (^ EMCLOUD) market cap crossed $1 trillion in early February. Yet in a matter of days, as the COVID-19 pandemic spread, fear tore through financial markets.

In early March, public markets experienced the steepest crash in history with volatility we have not seen given that the Great Economic downturn. The cloud index market cap dropped to ~$750 million and cloud multiples returned near to their historical averages of ~ 7x while the VIX volatility index spiked to the mid-80s. Both at global highs in February 2020, the ^ EMCLOUD and the S&P 500 compromised by approximately 35% by mid-March. Over the next two months, however, the ^ EMCLOUD recovered those losses, charging to a brand-new all-time high up on Might 7.

The cloud index has continued its increase ever since, and as of the close on May 11 has a market cap above $1.2 trillion and has returned to the lofty 12x forward run rate earnings multiples from 2019. Similar to Adobe in 2012, we anticipate numerous business to transition over to the cloud model, and the index will continue to broaden. As we predicted in this year’s State of the Cloud 2020, by 2025 we expect the cloud to penetrate 50% of enterprise software application.