The State of Software

AI is powering the rapid growth of software

Q4 2023 The State of Software AI is powering the rapid growth of software.

Introducing The State of Software The B2B software landscape is constantly evolving. As the world’s largest software marketplace, we have a direct lens into what’s happening in real-time – from real user reviews, website traffic, product and category insights, and more. Analysts on the Market Research team are stewards of G2’s taxonomy, constantly studying the marketplace to ensure it’s the best possible reﬂection of the realities that exist in the marketplace for software buyers. It’s always moving, and so are we. We’re proud to share the inaugural State of Software Report – a window into what’s happening in software – and share these insights for all. Our quarterly report will be your guide on what’s trending: the software categories emerging, growing fastest, as well as the trends with vendors and products within those markets. In this ﬁrst edition, we’re looking back over the past year to showcase where innovation is happening and give vendors, investors, and buyers a window into where these key software markets are headed.

Introducing The State of Software 02 Data & Insights from the World’s Largest Software Marketplace 04 AI Fuels Software Marketplace Growth 06 The AI Landscape 09 The Design Landscape 12 Table of The HR Landscape 15 The Marketing Landscape 18 Contents The Security Landscape 21 Rising Stars: Fastest Growing New Categories 24 Takeaways 26 Methodology 27

Data & Insights from the World’s Largest Software Marketplace

B2B software is growing at an average rate of 7% per quarter Over the past ﬁve years, the software Number of software listings on the G2 marketplace 2018-2023 industry has seen explosive growth driven by increased digital reliance across industries, the widespread Other adoption of cloud computing and SaaS, Sales Tools and notably, the leaps in AI and ML. Content Management IT Management Software has become a linchpin of Security modern business, with AI storming onto the scene - driving unparalleled Development innovation across all categories Commerce of software. IT Infrastructure HR ERP Marketing Office Vertical Industry Source: G2 data

AI Fuels Software Marketplace Growth

Vendors are racing to deliver AI software AI experienced the fastest growth Fastest-growing software markets by new product growth across all 26 high-level software markets on G2 — more than 2x YoY percentage increase Software market growth of the second-fastest growing market (Design). Artiﬁcial Intelligence In total, AI categories gained 643 new products between Sept. 1, 2022 and Design Sept. 1, 2023. HR Marketing Security Source: G2 data “Fastest-growing” includes high-level categories that had at least 150 new products added between Sept. 1, 2022, and Sept.1, 2023.

Diving into the 5 Fastest-Growing Software Markets AI Design HR Marketing Security Select a segment to navigate to it

21 The AI Landscape Total AI categories AI technology has boomed over the past year, since the launch of ChatGPT at the “ 1,078 end of 2022. Everything from CRMs to Total AI vendors ﬁnance technology has been injected with generative AI capabilities. The solutions that will stick will be 1,232 those that drive signiﬁcant and tangible Total AI products business value - from cost reduction to revenue growth.” 37,823 Total AI reviews

AI Category Insights • Content creation powers AI software growth While the energy of AI vendors to date 10 fastest-growing AI categories has been primarily directed into generating AI Chatbots, content creation YoY percentage increase Total product count categories are at the heart of today’s meteoric AI growth. Synthetic Media AI Writing Assistant Synthetic Media, AI Writing Assistants, and Text to Speech are leading the Text to Speech charge, as business users look for ways to supercharge their writing, image Chatbots creation, and more — and these tools are Voice Recognition providing fast, efficient ways to do so. MLOPs Platforms Image Recognition Intelligent Virtual Assistants Machine Learning Natural Language Understanding (NLU) Source: G2 data ‘“Percent increase” calculates how much the category grew between Sept. 1, 2022 and Sept. 1, 2023, based on new product proﬁles created on G2 and added to the category in that timeframe.

AI Product Insights • Most Visited New Products What emerging AI products are Rank Product Main Category attracting the most attention from buyers? 1 AI Image Generators Midjourney, ChatGPT, and DALL·E 2 2 AI Chatbots Software come out on top as the most visited new 3 AI Image Generators AI products — helping users create stunning images, write faster, 4 AI Image Generators and more. 5 AI Writing Assistants Synthetic Media tools are trending, with AI Image Generation and Chatbot 6 AI Video Generation products experiencing the most buyer traffic. 7 Chatbots 8 AI Code Generation 9 AI Chatbots Software 10 AI Writing Assistants Source: G2 data Eligible product proﬁles were created on G2 and added to the category between Sept. 1, 2022 and Sept. 1, 2023. “Most visited” counts unique G2 proﬁle page views during the same time period.

32 The Design Landscape Total Design categories The evolving content supply chain continues to pose major challenges for “ 1,661 businesses. Unable to meet the demand for Total Design vendors high quality, relevant, and engaging content, new design tools – many of them AI-enabled – are emerging to help streamline the design process and drive 2,040 efficiencies within organizations.” Total Design products 109,195 Total Design reviews Matthew Miller Principal Analyst, AI, Automation & Analytics @ G2

Design Category Insights • Demand to streamline design process creates surge in editing tools As the demand for visual content 9 fastest-growing Design categories accelerates, so does the growth of Design categories focused on helping YoY percentage increase Total product count buyers generate, automate, and share this content. Photo Editing Audio Editing Editing tools in particular are experiencing a surge, with Photo OTT Platforms Editing, Audio Editing, and Video Editing all appearing in the top 9 Stock Photos fastest-growing Design categories. Video Editing Live Stream 3D Modeling Animation Photo Management Source: G2 data. ‘“Percent increase” calculates how much the category grew between Sept. 1, 2022 and Sept. 1, 2023, based on new product proﬁles created on G2 and added to the category in that timeframe.

Design Product Insights • Most Visited New Products The most popular Design products are Rank Main Category injected with AI, as designers utilize AI as a capability — rather than a solution — 1 Video Editing to boost design process efficiency. Whether these tools help users with 2 3D Painting design inspiration, collaboration, or 3 Other Design editing, they are reducing the time it takes content to reach its audience. 4 Photo Management With this demand for using AI to simplify 5 Live Stream Broadcasting and streamline design, Video.ai – an AI-powered content repurposing 6 Stock Photos platform – emerges as the most most visited new Design product. 7 Video Editing 8 Other Video 9 Photo Editing 10 Video Editing Source: G2 data Eligible product proﬁles were created on G2 and added to the category between Sept. 1, 2022 and Sept. 1, 2023. “Most visited” counts unique G2 proﬁle page views during the same time period.

79 The Human Resources Landscape Total HR categories As businesses increasingly look to While AI opportunities abound, recruit qualiﬁed candidates and retain potential legal restrictions and privacy 3,827 them with improved employee “ “ concerns are limiting opportunities for Total HR vendors experiences, their tech stacks reﬂect real-world applications of AI in HR this with solutions focused on perks software today.” and wellness.” 4,199 Total HR products 212,565 Total HR reviews

HR Category Insights • Employee retention & attraction tools top HR's priority list Smart job growth – focused on quality, 10 fastest-growing HR categories not quantity – is the name of the game in the HR industry. Total product count YoY percentage increase Helping HR leaders cater to this Talent Marketplace Platforms approach, Talent Marketplace Platforms Talent Intelligence are experiencing the fastest growth across HR software categories — Job Board increasing development opportunities algorithmically. Talent Intelligence tools Corporate Wellness also get a boost, bringing a range of new Freelance Platforms AI tools and psychometric assessments to ensure users get the “right ﬁt” for Whistleblowing jobs the ﬁrst time. Talent Assessment Payroll Absence Management Employee Recognition Source: G2 data “Percent increase” calculates how much the category grew between Sept. 1, 2022 and Sept. 1, 2023, based on new product proﬁles created on G2 and added to the category in that timeframe. See methodology in appendix for more details.

HR Product Insights • Most Visited New Products The professional and personal Rank Product Main Category health aspects of Employee Experience (EX) is a key interest among HR software 1 Job Search Sites buyers. 2 Core HR After startup specialist Wellfound, EX 3 Employer of Record (EOR) offerings like Nivati, Conﬁrm, ShieldByte LMS, TeamOhana, and 4 Freelancer Management Wellbees are receiving strong attention from G2 visitors. 5 Corporate Wellness 6 Performance Management 7 Corporate Learning Management Systems 8 Workforce Management 9 Corporate Wellness 10 Learning Experience Platforms (LXP) Source: G2 data Eligible product proﬁles were created on G2 and added to the category between Sept. 1, 2022 and Sept. 1, 2023. “Most visited” counts unique G2 proﬁle page views during the same time period.

116 The Marketing Landscape Total marketing categories In the Marketing landscape, we’re seeing more products embracing “ 5,876 merging solutions to become ‘one stop Total marketing shops’ for the consumer. vendors The increasing popularity of these products is due to the marketer’s 6,359 ability to seamlessly focus on multiple segments and channels.” Total marketing products 363,279 Total marketing reviews Matthew Miller Principal Analyst, AI, Automation & Analytics @ G2

Marketing Category Insights • Marketers demand tools to better understand and engage with buyers across channels Understanding the needs and intent of 10 fastest-growing Marketing categories buyers is pivotal to marketing effectiveness. Knowing their mobile YoY percentage increase Total product count habits and having the ability to create an QR Code Generator ideal mobile experience has been a constant and increasing shift as well. Content Creation With these mandates in mind, the Press Release Distribution fastest-growing Marketing categories Brand Intelligence represent those focused on securing assets and information faster - for URL Shortener either the consumer or the vendor – with QR Code Generator tools seeing the Lead Intelligence fast growth - 66% over the Inﬂuencer Marketing Platforms past year. Email Deliverability SEO Tools Market Intelligence Source: G2 data ‘“Percent increase” calculates how much the category grew between Sept. 1, 2022 and Sept. 1, 2023, based on new product proﬁles created on G2 and added to the category in that timeframe. See methodology in appendix for more details.

Marketing Product Insights • Most Visited New Products Rank Product Main Category The most visited new Marketing products reinforce the trends observed 1 Webinar in fastest-growing Marketing categories, underscoring buyers’ 2 Other Marketing increasing desire to efficiently understand and engage 3 Lead Intelligence with customers. 4 A/B Testing Looking to host webinars, create 5 content, and understand lead and Content Creation product data, marketers are 6 Content Creation researching new tools across these categories to improve their results. 7 Social Media Management 8 Online Community Management 9 User Research 10 Other Marketing Source: G2 data Eligible product proﬁles were created on G2 and added to the category between Sept. 1, 2022 and Sept. 1, 2023. “Most visited” counts unique G2 proﬁle page views during the same time period.

The Security Landscape 112 Total security categories The democratization and optimization of “ security technologies is helping businesses of all sizes enable better 1,880 security postures and strategies globally. Total security vendors While there is a valid ﬁnancial reason for organizations to re-evaluate their overall investments, cybersecurity is one area 3,008 that should be exempt from a knee jerk Total security reduction. Focus on optimizing and products operationalizing your resources and using market and industry insights to vector 80,622 your resources into what matters most.” Total security reviews

Security Category Insights • Urgency to detect & defend against threats spurs security software growth Organizations are moving away from 10 fastest-growing Security categories traditional perimeter-based security and adopting zero-trust principles that YoY percentage increase Total product count require continuous veriﬁcation of user identities and strict access controls, Proxy Network leading to the development of Attack Surface Management innovative security tools and practices to enforce these principles effectively. Penetration Testing The fastest growing Security category, Website Security Proxy Networks, helps avoid bot Managed Detection & Response (MDR) detection and mask repeat visitors with new IPs. Attack Surface Management is SSL & TLS Certiﬁcates a growing category as well, as organizations’ attack surfaces continue Zero Trust Networking to expand via devices, networks, API Security applications and various cloud models. Cloud Security Posture Management (CSPM) Threat Intelligence Source: G2 data ‘“Percent increase” calculates how much the category grew between Sept. 1, 2022 and Sept. 1, 2023, based on new product proﬁles created on G2 and added to the category in that timeframe. See methodology in appendix for more details.

Security Product Insights • Most Visited New Products Rank Product Main Category The fastest growing Security category, Proxy Networks, hosts the most visited 1 new product in the category as well: Proxy Network ASocks Residential Proxies. Semgrep, 2 the open-source static code tool, Software Composition Analysis follows in second. 3 Browser Isolation Challenged to effectively deliver 4 DNS Security Solutions security and phishing training to employees at scale, companies are 5 Identity Threat Detection and Response (ITDR) turning to Browser Isolation tools – like IE Tab – to enforce security policies 6 Vulnerability Scanner across multiple remote endpoints. 7 Business VPN 8 Cloud Data Security 9 Business VPN 10 Attack Surface Management Source: G2 data Eligible product proﬁles were created on G2 and added to the category between Sept. 1, 2022 and Sept. 1, 2023. “Most visited” counts unique G2 proﬁle page views during the same time period.

Rising Stars Most-visited new categories underscore diversity of expanding software needs.

B2B software buyers are shopping for a wide range of solutions, from sales and o昀케ce tech to data and APIs Looking at G2's newest categories Top 10 new categories with the most buyer tra昀케c on G2 created within the past year with the highest traffic reveals that businesses Category Pageviews are looking for solutions to automate sales processes (Demo Automation), Demo Automation manage data and APIs (API Platforms, API Platforms Uniﬁed APIs, Data Observability), and implement AI for content generation Data Observability (Generative AI, Synthetic Media). Generative AI Cloud-Native Application Protection Platform (CNAPP) Heavy-Duty Repair Synthetic Media Uniﬁed APIs Environmental, Social, & Governance (ESG) Reporting Desk Booking Source: G2 data “New categories” counts categories added to G2 between September 1, 2022 and September 1, 2023.

Key Takeaways 1 4 The software industry has witnessed exponential The dynamics of the human resources industry have growth in the past ﬁve years due to elevated digital shifted towards quality-driven job growth, which is reliance, wider adoption of cloud computing and SaaS, enabled by AI-facilitated platforms for talent marketplace and signiﬁcant advancements in AI and ML. and intelligence. 2 5 AI-powered features and capabilities are fueling The marketing landscape has evolved, with a trend towards growth across the B2B software landscape as ‘one-stop shop’ solutions that allow marketers to efficiently more and more vendors add true AI capabilities to focus on multiple segments and channels. their products. 6 3 Indiscriminately cutting security technology budgets The growing demand for high-quality and engaging carries risk, so businesses should look to optimize their content has increased the need for AI-enabled resources and apply market insights to channel their design tools. resources effectively.

Methodology

G2.com Marketplace activity yields unparalleled insight into 80 million+ global the dynamics shaping B2B software and services annual software buyers 150k+ products and services across 2,100+ categories 2M+ B2B user reviews that are authenticated and trusted $257M VC funds raised from leading investors Regional numbers represent monthly buyers visiting G2.com annually.

G2 offers buyers valuable insight into the real experience of their peers with over 2 million B2B software and services reviews Total G2 reviews by quarter

About this report About G2 G2’s State of Software Report examines trends from its B2B software G2 is the world's largest and most trusted marketplace, based on proprietary data across 2 million+ trusted software marketplace. More than 80 reviews, 150,000+ products and services, 2,000+ categories, and 80 million people annually — including million annual visitors. Insights are based on data analysis from employees at all Fortune 500 companies September 2022 - September 2023 unless otherwise noted, to reﬂect — use G2 to make smarter software trends over the past year observed on G2. decisions based on authentic peer reviews. Thousands of software and ● Report authors include: Shaun Bishop, Victoria Blackwell, Chase services companies of all sizes partner Cunningham, Jenny Gardynski, Stephanie Graham, Jeffrey Lin, with G2 to build their reputation and grow Matthew Miller, Priya Patel, Grace Savides, Chris Voce their business — including Salesforce, ● Report contributors include: Daniella Alscher, Sarah Reks, HubSpot, Zoom, and Adobe. Mike Puglielli Visit research.G2.com to learn more. To learn more about where you go for software, visit www.G2.com and follow us on LinkedIn. G2 is the world's largest and most trusted software marketplace. More than 80 million people annually — including employees at all Fortune 500 companies — use G2 to make smarter software decisions based on authentic peer reviews. Thousands of software and services companies of all sizes partner with G2 to build their reputation and grow their business — including Salesforce, HubSpot, Zoom, and Adobe. To learn more about where you go for software, visit www.g2.com and follow us on LinkedIn.