The coronavirus emergency has inflated the turnover of web giants which already in the previous five years had in any case doubled their aggregate revenues, achieving an overall performance superior to that of the manufacturing multinationals. Not only that, in times of pandemic, while all the other sectors were grappling with an unprecedented crisis, WebSoft made profits, arriving at 18 million profits per day.
To provide new updated data is the Mediobanca Research Area report which analyzes the financial statements of the 25 WebSoft giants (Software & WebCompanies) in the five-year period 2015-2019, but above all the impact of Covid-19 on the results of the first half of 2020.
GIANTS OF THE WEB AND COVID-19: REVENUES AND PROFITS RUN
In the first six months of 2020, in the midst of the Covid-19 emergency, manufacturing companies suffered heavily from the crisis triggered by the Covid-19 pandemic and the consequent lockdowns. In percentage terms, manufacturing recorded an 11% drop in turnover in the first half-year. A massacre that is compared instead with the surge experienced by the giants of the web. Indeed, in the same reference period, the recession triggered by the coronavirus did not affect Web Soft, whose turnover grew by 17%.
Analyzing the results of the individual sectors in terms of turnover, the increases are all double-digit: +31,3% for e-commerce compared to the first six months of 2019, +26,1% for Fintech, +24,6. 22,2% for subscription subscription, +22,6% for cloud services. “On the other hand – underlines Mediobanca – there was a reduction in revenues linked to sharing mobility (-50,8%) and in online sales of travel and accommodation bookings (-XNUMX%)”. Translated: with the blocking of travel, all the services associated with them have sunk.
Double-digit growth also for profits (+16,6% on the first half of 2019). At this juncture, a new record was even set: the web giants recorded profits of 18 million euros a day, on average almost four times more than the manufacturing multinationals (5 million a day). "In the first six months of 2020, liquidity also increased, with an average rate of +11 billion per month, reaching 589 billion euros at the end of June 2020", highlights the report.
THE COLOSSAS OF THE WEB: THE RANKING
WebSoft's revenue rankings in the first 6 months of 2020 are led by Nintendo (+71,5%), followed by Amazon (+33,5%) and Salesforce (+29,5%). The three Chinese giants Alibaba (+28,6%), JD.com (+28%) and Tencent (+27,9%) also made a big splash. Conversely, a negative sign for Uber (-7,7%), Expedia (-51,8%) and Booking (-56,4%).
“At the end of June 2020, Nintendo, with no financial debt, also shines with capital solidity, followed by Meituan Dianping, Alphabet and Facebook. In general, the solidity of the giants at the aggregate level remains unchanged despite a +13,8% increase in financial debt in the first six months of 2020. The same goes for liquidity which always sees the Japanese giant Nintendo in the lead, with liquidity levels to 63,6% of total assets at the end of June 2020, ahead of Baidu, Booking and Microsoft,” the report explains.
Moving on to profitability, in the first half of 2020 it is Oracle that takes the first step of the podium in the ranking for ebit margin (39,4%), followed by Nintendo (36,4%) and Micro soft (36,1%). Compared to 2019, Facebook loses its first position to fourth place (32,6%).
RECORD PERFORMANCE ON THE STOCK MARKET
In the first 9 months of 2020, the market capitalization of WebSoft giants increased by 30,4% against a 6% decline recorded by manufacturing companies. In first place, in terms of market cap, we find Microsoft, with a capitalization of 1.357 billion. Followed by Amazon (1.345 billion) and Alphabet (852 billion.
Speaking instead of performances, as at 30 September 2020, triple-digit increases were achieved by Meituan Dianping (+128,8%) and JD.com (+110,9%); in the negative field only Automatic Data Processing (-21,7%), Booking Holdings (-20,3%), Expedia (-18,8%) and Baidu (-4,1%).
PRE COVID-19 ERA
If, as we have seen, during the pandemic the big names on the web continued to grind revenues and profits, even in the previous period the picture was not negative at all, on the contrary. In 2019, the aggregate turnover of the 25 WebSoft giants reached 1.014 billion, equal to 8% of the total turnover of the world's industrial multinationals. Revenues grew at a rate more than 10 times higher than those of manufacturing companies (+118,3% in the five-year period 2015-19 compared to +10% of manufacturing multinationals), while last year profits reached 146 billion, increased at an average annual rate of +24,1% in the five-year period 2015-19.
“The market is increasingly concentrated”, observes Piazzetta Cuccia, underlining how Amazon, Alphabet (Google and Microsoft) alone account for about half of WebSoft's aggregate revenues. Indeed, Amazon with its 249,7 billion alone represents a quarter of it.
WHAT ABOUT THE TAX?
Always a sore point. “Approximately half of WebSoft's pre-tax profit is taxed in low-tax countries, resulting in cumulative tax savings of more than €46 billion in 2015-2019. The effective tax rate of the WebSoft multinationals is equal to 16,4%, below the theoretical one of 22,2%. In the period 2015-2019, taxation in countries with subsidized taxation resulted in tax savings of 14,2 billion, 11,6 billion and 7,5 billion for Microsoft, Alphabet and Facebook respectively”, underlines Mediobanca.
And the Italian taxman? In 2019, the branches of the WebSoft giants paid almost 70 million to the tax authorities for an effective tax rate of 32,1%.
