Daily Brief TMT/Internet: Amazon, Pegasystems Inc, Robot Payment Inc, Kinatico , Reddit , Badger Meter, EngageSmart LLC, SolarWinds and more

• Amazon’s long-term AI ambitions are being tested as its $8 billion bet on Anthropic faces a potential turning point.
• Recent reports reveal that Anthropic, the AI startup behind the Claude language model and currently enjoying a $5 billion annualized revenue run rate, is in talks with Alphabet’s Google for a cloud-computing deal potentially worth tens of billions of dollars.
• This shift, if finalized, could grant Anthropic access to Google’s advanced AI chips, a key competitive asset as workloads grow increasingly complex.

• Pegasystems’ third-quarter financial results from 2025 highlight both strengths and challenges for the company.
• The reported results underline Pegasystems’ ability to execute its cloud strategy and leverage artificial intelligence innovations, which have been key growth drivers.
• The company’s focus on AI-driven process automation and orchestration platforms remains a cornerstone of its strategy, which is increasingly appealing to financial services and other regulated industries due to its approach of ensuring predictable workflows.

• Robot Payment is a high-growth fintech company capitalizing on Japan’s digital transformation, specializing in B2B payment automation and subscription management.
• The company exhibits a robust and stable business model, with approximately 98% of its revenue being recurring, driven by its suite of SaaS-based solutions.
• Financial performance is strong, marked by consistent double-digit revenue growth, expanding margins, and a significant turn to positive profitability and operating cash flow in recent years.

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• Kinatico Ltd (ASX:KYP) is a ‘Know Your People” regtech company providing workforce compliance monitoring and management technology and services.
• KYP announced at its 24 October AGM that its Q1 FY26 revenue had increased 14% on the previous corresponding period (pcp) to a record $9.1m, with Subscription-as-a-Service (SaaS) revenue for the quarter increasing 58% on the previous corresponding period (pcp) to $4.8m or 53% of total revenue.
• EBITDA for the quarter increased 21% to $1.4m.

• Reddit has surged in prominence over the past year, benefiting from two fast-growing monetization channels: AI licensing and advertising.
• With daily active users (DAUs) up 21% year-over-year and advertising revenue soaring 84% to $465 million in Q2 2025, Reddit is experiencing its most profitable quarters ever.
• Strategic licensing agreements with OpenAI and Google have brought highmargin revenues to the company, capitalizing on Reddit’s vast trove of authentic, human-generated content.

• Badger Meter reported a robust third quarter in 2025, displaying continued growth and a solid financial footing.
• The company achieved a 13% year-over-year increase in total sales, reaching $236 million.
• This growth was mainly driven by the utility water product line, which saw a 14% increase, driven by higher ultrasonic meter volumes, BEACON Software sales, and water quality product sales.

• Privatization by Vista Equity Partners: In a significant strategic shift, EngageSmart was acquired by Vista Equity Partners for approximately $4.0 billion and taken private on January 26, 2024. This transaction fundamentally alters the investment landscape, as the company’s stock is no longer publicly traded. The partnership with a top-tier software investor like Vista is expected to accelerate growth and innovation.
• Strong Position in Vertical SaaS: EngageSmart is a leading provider of vertically-tailored customer engagement software and integrated payment solutions. The company operates through two main segments, SMB Solutions and Enterprise Solutions, serving specific verticals like Health & Wellness, Government, Utilities, and Financial Services. This focused approach allows for deep industry integration and high customer retention.
• Consistent Financial Outperformance: The company has demonstrated a robust track record of revenue growth and expanding profitability. For the third quarter of 2023, EngageSmart reported a 24% year-over-year increase in revenue to $97.7 million. This financial strength is driven by strong demand for its SaaS solutions, high digital adoption rates, and successful customer acquisition and expansion within its niche markets.

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• Strategic Repositioning Towards Observability: SolarWinds is actively transitioning its business model to focus on subscription-based, integrated observability platforms. This strategic shift is aimed at capturing a larger share of the growing market for hybrid IT and cloud management, moving beyond its traditional on-premise monitoring tools.
• Financial Recovery and Margin Improvement: The company has demonstrated a significant financial turnaround, swinging from a substantial net loss in 2022 to profitability in 2024. This recovery is underpinned by steady revenue growth, improving margins, and robust cash flow generation, indicating operational stabilization post-restructuring efforts.
• Overhang from SUNBURST Cyberattack: Despite operational improvements, SolarWinds continues to navigate the long-term reputational and legal ramifications of the 2020 SUNBURST cyberattack. A recent settlement with the SEC resolves a key uncertainty, but the event underscores the persistent risks associated with cybersecurity in the software supply chain and potential impact on customer trust.

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