App Economy Insights — This Week in Visuals: ORCL ADBE DOCU MTN CHWY

Oracle sells database software and, increasingly, cloud computing (renting out servers, especially for AI). The headline number everyone watched was "RPO" — remaining performance obligations, which is the dollar value of contracts customers have signed but Oracle hasn't billed or delivered yet. Think of it as the order book. That order book jumped 363% in a year to $638 billion, an enormous signal of future demand.

So why did the stock drop 12%? Because the market shifted from celebrating the order book to worrying about the cost of filling it. To deliver all that AI cloud capacity, Oracle has to spend roughly $70 billion building data centers, raise about $40 billion more in debt/equity, and accept that its profit margins will "step down" because renting raw computing power is a lower-margin business than selling software licenses. Its free cash flow was actually negative $24 billion last year as construction outran the cash coming in. App Economy's read: the backlog is no longer the question — execution is. Can Oracle actually build and operate all this profitably without the financing strain biting? "Now a bet on execution."

Adobe makes Photoshop, Acrobat (the PDF reader), and a suite of creative and document tools, sold mostly as monthly subscriptions ("SaaS" = software as a service). Its stock has fallen ~40% this year — part of a broader "SaaSpocalypse" worry that AI will let people do this work cheaply without paying for big software suites. Despite that, revenue still grew 13% and its newer AI products are growing fast (AI-first revenue tripled to over $500 million). The stock is now cheap by its own history — about 9x forward EBITDA (a rough cash-earnings multiple).

The big strategic bet is "freemium": give a basic version of its AI tools (Firefly, Express) away free to pull in a huge audience — creative free users jumped from 50 to 90 million — then convert a slice of them to paid later. App Economy calls this "the Acrobat Reader playbook applied to AI": Adobe gave away the Reader for decades to make its paid PDF tools the standard, and it's trying that again. It's also switching from charging per "seat" (per user) to charging by "credits" (usage). The risk: this can depress revenue now while you wait for the free users to convert, and it's happening just as the longtime CFO leaves (for Marvell) and the company hunts for a new CEO. The whole thesis hinges on whether that free funnel turns into visible paying customers within a few quarters.

DocuSign is best known for electronic signatures, but its growth bet is "IAM" (Intelligent Agreement Management) — software that doesn't just sign a contract but helps create, review, track, and act on agreements, increasingly with AI agents. IAM is now 12.6% of recurring revenue (up from 10.8%) and management expects 18% by year-end, so the newer, stickier product is scaling.

The interesting shift is how it charges: instead of billing per signature, the new plan uses "credits" tied to outcomes — customers buy a pool of usage and spend it across tasks. That can grow revenue per customer as they use more AI features. DocuSign also reported a record share buyback (returning cash to owners) and is wiring in outside AI models (Anthropic's Claude, OpenAI) and partners (Harvey, Thomson Reuters). The pitch, backed by a Deloitte study it cited, is that end-to-end platforms deliver far more AI return than scattered point tools.

Vail Resorts (which trades under the ticker MTN) owns ski mountains and sells the Epic Pass. Its business lives and dies by snow, and this was the worst season on record — snowfall in the Rockies came in 55% below the 30-year average. Fewer people could ski, so skier visits fell 16%, and — worryingly for next year — advance pass sales for the 2026/27 season are already down 10% in units. The company had to cut its full-year profit outlook for the second time, lowering its resort EBITDA guide to about $745 million.

The reason this is a "cyclical" to watch rather than a broken business: weather mean-reverts. One terrible season doesn't change the long-run economics, and management is leaning on a $106 million cost-cutting plan to cushion the blow, keeping its $2.22 dividend and planning for a "normal" next season (Australian pass sales are even up ~26%). But the read is cautious: when the core driver (snow) fails and pass pre-sales soften, the downside is real until conditions normalize.

Chewy is the online pet-supplies retailer. Its secret weapon is "Autoship" — automatic recurring deliveries of food and supplies — which now makes up 84.4% of all sales. That recurring base is what makes Chewy defensive in a weak economy: people keep feeding their pets even when they cut back elsewhere. Revenue grew 8%, and free cash flow (the spare cash after running and investing in the business) jumped 45%.

Two things to balance. On the growth side, Chewy closed its acquisition of Modern Animal, a vet-clinic chain, pushing it deeper into recurring pet-healthcare spending (and most of those clinic customers are new to Chewy). On the caution side, it trimmed its full-year sales guidance because discretionary pet spending (toys, extras) is soft — so it's "stretched but steady": the recurring core holds and margins are expanding even as the splurge categories slow.