When lenders panic, numbers speak louder than narratives.
The conversation around artificial intelligence has moved beyond excitement. It has entered balance sheets, debt pricing, and lender calls.
Over the past few weeks, fears of an AI driven disruption to traditional SaaS models have triggered a selloff in private software loans. The term being used in credit circles is “SaaSpocalypse” a reflection of concerns that AI could compress margins, weaken pricing power, and slow growth for heavily leveraged companies.
In response, several private equity backed software firms made an unusual move. They released earnings updates ahead of schedule to calm lenders.
Here is what we know.
McAfee: Stability Over Acceleration
Cybersecurity firm McAfee shared preliminary fourth quarter revenue of $626 million, largely flat year over year.
• Adjusted Q4 earnings fell 1% to $292 million
• Previous quarter earnings had declined 9% due to one time marketing spend and higher PC shipments
• Its unsecured bonds due 2030 rose from 79.5 cents to 85 cents before softening again
The message was simple. Revenue is steady. Earnings pressure is manageable. Cash flow remains intact.
For lenders, stability matters more than hypergrowth at this stage.
Rocket Software: Quiet Growth in a Noisy Market
Rocket Software, backed by Bain Capital, reported:
• 2025 revenue up 5.2% to about $1.4 billion
• Adjusted earnings rising to $850 million from $801 million
• Annual recurring revenue up 6.3% to roughly $1.1 billion
• Its term loan trading around 97 cents
The firm also disclosed results alongside its acquisition of the Vertica analytics database, positioning itself around secure information management for AI use cases.
In a market questioning legacy software models, Rocket is leaning into AI integration rather than resisting it.
Perforce: Mild Pressure, Strategic Pivot
Perforce Software reported a slight revenue decline:
• Revenue slipped to $644 million from $654 million last year
Management emphasized embedding AI features into products to drive sales momentum. This reflects a broader industry trend. Companies are not denying disruption risk. They are repositioning to participate in it.
Cloudera: Highlighting Momentum
Data analytics firm Cloudera publicly emphasized:
• Over 50% year over year growth in new and expansion business
• Strong annual recurring revenue growth
• Term loan recovering to around 94 cents from 86.5 cents
For a company typically private about financials, the decision to highlight performance underscores how sensitive credit markets have become.
Why Debt Markets Are Reacting So Sharply
The core issue is leverage.
Many private software firms were acquired during an era of cheap money. Buyouts were funded with substantial debt under the assumption of durable recurring revenue and predictable growth.
AI challenges that assumption in two ways:
• It could automate or replace certain SaaS workflows
• It could shift pricing models, reducing per seat revenue
When growth expectations weaken, debt suddenly looks heavier. That is why distressed software loans reportedly swelled rapidly in a short span.
Bond and loan pricing now reflect uncertainty more than actual collapse.
Is This Panic or Structural Shift
There are two competing narratives emerging in credit markets.
Narrative one: Overreaction
Many lenders argue AI will create as many winners as losers. Companies that embed AI effectively could expand margins and improve customer retention.
Narrative two: Margin Compression Risk
If AI lowers barriers to entry and reduces switching costs, legacy SaaS businesses may struggle to defend pricing power. In leveraged structures, even modest slowdowns matter.
The truth likely sits somewhere in between.
What This Means for Investors
For equity investors, this is about identifying who can adapt.
For credit investors, it is about durability of cash flows.
Watch for:
• Stability in annual recurring revenue
• Evidence of AI integration driving upsell rather than cannibalization
• Debt trading levels and refinancing conditions
• Margin trends over the next two to three quarters
Early earnings releases are not about confidence alone. They are about survival of perception in fragile credit markets.
Final Observation
This is the first real stress test of the leveraged SaaS model in the AI era.
Growth is no longer enough.
Recurring revenue is no longer unquestioned.
Lenders want proof.
The companies that can show resilience with numbers rather than narratives will separate themselves quickly.
The AI conversation has moved from product demos to debt covenants.