Business spend signals

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In today’s special edition, we’re diving into some of the top data signals from our just-released Summer Business Spending Report, which is based on billions of aggregated, anonymized transactions from 70,0000+ businesses on Ramp.

Four signals from our Summer Spending Report

We're highlighting some of the top data points from our latest business spending report and what they indicate for the future. You can find the full report here.

Signal #1: AI adoption is spreading much further than tech

AI is no longer just a tech story. While tech still leads in paid adoption, the sector’s adoption growth rate is cooling. Meanwhile, middle-of-the-pack sectors are closing the adoption gap increasingly fast. While every sector Ramp tracks rose since last quarter’s report, middle tiers gained the fastest.

• Manufacturing led adoption gains, up eight percentage-points
• Construction and healthcare were both up about seven points
• Finance and insurance were up over five points

Non-tech sectors are seeing outsized gains, a sign of the mainstream-ification of AI tools across the corporate world. Another sign of this:

Nearly half of small businesses now pay for AI.

Signal #2: The model vendor playing field can change fast

In traditional software, enterprise adoption often creates long-term commitment. That’s not the case (at least not yet) with AI. Anthropic surpassed OpenAI in adoption by U.S. businesses for the first time in April, and the swap happened fast:

• Anthropic adoption spiked 21.8 percentage points from January to July, and it now leads OpenAI by 3.8 percentage points. Over the same period, OpenAI adoption fell by 1.4 percentage points.

The sharp rise in the graph tells the story of how fluid this market still is: in this nascent vendor category with low lock-in and minimal switching costs, the playing field can change quickly. Of customers that use Anthropic or OpenAI, 52% use both.

Meanwhile, diversified AI players like Google and Microsoft have indirect lock-in through their entrenched enterprise products (e.g. Google bundling Gemini into Workspace).

Signal #3: AI-pilled firms are growing headcount

Everyone wants to know how AI will affect jobs in the long-term. Many suspect that it’s hurting hiring, especially for entry-level roles. New research using firm-level spend data from Ramp paired with workforce records from Revelio Labs found something surprising.

In a sample covering 21.5K+ U.S. firms:

• Companies that invest heavily in AI grow headcount 10% over the two years following adoption. These gains are entirely driven by high-intensity adopters. Low-intensity adopters see no statistically significant change.
• Entry-level hiring grew even faster, up 12% over the two years following adoption at the companies making the largest AI investments. At the end of the 24-month analysis period, firms in the high-intensity group also increased their workforce share of entry-level workers (up 1.15 percentage points compared to the control group).

Signal #4: SaaS companies are becoming more like AI vendors

Seat-based pricing still rules the SaaS world, but as AI gets entrenched into more software workflows, metered billing could reprice the entire industry.

Fourteen percent of traditional SaaS vendors billed for an AI-powered feature in the past year, up from 8% a year earlier. These features can be billed as seat or tier-based or as consumption-based (metered API usage).

• Seat-based billing still dominates for embedded AI products: only 3% of traditional SaaS vendors who bill for AI features use a usage-only model.
• And yet… Usage-billed products now account for 36% of embedded AI spend, up from 24% a year earlier, even as they remain a minority.

That’s because the cost difference is significant: the median business billed based on usage spends 10.6x more annually on embedded AI SKUs than one paying only for seat-based products.

A deep dive into the AI hiring research

In this Leading Indicators video, Ramp’s lead economist Ara Kharazian unpacks the data and what it means for the future of jobs.

Signals Shortlist

• Ernst & Young is giving $100M in bonuses to staff for ‘human’ skills (WSJ)
• OpenAI says its ad business has hit $1B annualized revenue run rate (CNBC)
• FTC sues Amazon, alleging it overcharged advertisers (CNN)
• The US debt crisis just got uglier: interest hits a new record (Yahoo Finance)
• Warsh’s inflation warning sets up September showdown for the Fed (Bloomberg)
• Nvidia forecasts 70% sales growth next year, signals AI spending boom has years left to run (Reuters)

🗓️ Leading Events:

Tuesday, September 1: JOLTS. Earnings expected from Palo Alto Networks, Nio, and Dell

Wednesday, September 2: Earnings expected from Broadcom and Snowflake

Thursday, September 3: Earnings expected from Lululemon, Docusign, Zscaler, UiPath, and Asana

Friday, September 4: August jobs report (aka “The Employment Situation”).