Tyler Crowe

And I'm going to explain this because this is kind of like wonky balance sheet stuff that I love to get into.

So

You can basically have negative equity for two reasons.

You can lose money over time and have negative retained earnings.

You have unprofitable companies for a long time.

But you can also have negative retained earnings and negative equity if, for example, a company buys back a lot of its stock or pays a generous dividend.

Because dividends are not retained earnings and bought back stock is called treasury stock and it goes against the earnings of a company.

So if you buy back more stock than you earn and retain in earnings, you can actually dwindle down the equity in the company to the point of zero.

As you mentioned, Domino's is a version of this, and Starbucks is a version of this, and there's several other companies too.

I think it's either Moody's or MSCI, both companies that have negative shareholder equity, because they've done so much to reward shareholders with buybacks and dividends that they don't have shareholder equity anymore.

When you see this, you have to look at it as whether or not the company is doing it because they're unprofitable or because they're throwing a bunch of cash back to its investors.

In this case, I would say,

at least in Domino's and Starbucks' case, over time, it's been good capital allocation because they have been able to enhance shareholder returns through buybacks and dividends to knock down the equity.

So I hope that answers your question.

I saw this question and I was like, I have to answer this one by myself.

I'm sorry that I made you guys sit through that, but this was absolutely what I wanted to hit.

But for you guys, this was basically an aggregation of about four or five different questions about SaaSpocalypse hitting software companies.

And we had Daniel S. ask specifically about Salesforce, and Laura M. asked specifically about Wix.

I'm going to let you guys pick which one you want to discuss in relation to the SaaSpocalypse.

John, you go first.