Businesses doubled down on AI spending in Q1 2023
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2023 has had a dramatic start: ChatGPT giving rise to a new AI era, the banking crisis, a drastic move in both equities and interest rates, to name just a few seismic events.
At Ramp, we help companies manage more than $1 billion per month in spend, from consumer brands like Barry’s Bootcamp and Caraway to tech companies like TaskRabbit and Quora. We just released our Q1 Spending Benchmark report that analyzes how businesses have reacted to these game-changing developments.
Testing the AI waters
The number of businesses spending with AI vendors rose sharply in January with the launch of ChatGPT. But the amount spent on AI vendors overall grew more slowly, suggesting businesses are still evaluating the technology and its applications.
This is not surprising. At Ramp, we see too many half-baked chatbots masquerading as useful AI. We believe businesses are better served by AI that can embed into their operations as “co-pilots” to help them work faster and smarter.
Get the full report to see the list of top AI vendors on Ramp.
Decreasing deposit exposure
Like many others, Ramp customers reacted to the banking crisis by moving funds to new banks. Chase, Bank of America, and Morgan Stanley saw the biggest gains between March 9-31, with assets increasing as much as 3x. Businesses diversified their bank holdings: the average number of bank accounts connected to Ramp jumped from February to March. In late March, bank flows normalized but since then ongoing volatility has led to new spikes.
Download the full report to see how Ramp bank flow fluctuated in March.
Returning to a focus on top-line growth
Our “same store sales” data show increased spending over the past six consecutive months in categories heavily correlated with growth: office, professional services, and SaaS/software. Electronics spending also finally increased in March after five straight months of decline, suggesting that businesses are starting to staff up in-house.
However, there's evidence of working capital challenges: the median number of days to pay invoices rose, suggesting businesses are continuing to term out payments where they can. An analysis of over 12,000 customer calls also shows increased mentions of “borrow” and “working capital,” even as mentions of “layoffs” and “recession” decreased.
Check out the report for more data breakdowns, including card spend by company size and industry.
Grab the complete report
Overall businesses ended the quarter on a strong note, increasing card spend by 17% from February to March. Although the ramifications of the banking crisis are still unfolding and potential interest hikes continue to loom, our Q1 data show that businesses are staying forward-looking and innovative in the face of market challenges.
Explore our data in more detail and see how spending is trending over time in our Q1 Spending Benchmark report.