The revenues of the world's major Software & Web operators are growing again. In the first nine months of 2023, i main operators worldwide in the sector of websoft have seen a reversal of the trend compared to 2022, with aincrease of 10,6% in their aggregate turnover.
The most significant performances were observed in innovative mobility services, such as Ride-hailing and Sharing Mobility (+23,8%), in the aOnline travel sales business (+20,4%) and in the performance of Delivery (+19,3%), with this sector experiencing significant consolidation. Although the growth in turnover involved all sectors, the areas with greatest impact e-commerce (31%), advertising (23%) and cloud (16%) remain.
This is what emerges from the annual survey of the major global Software & Web groups carried out byMediobanca Studies Area.
Lo studio analyzes the data for the first nine months of 2023 and the three-year period 2019-2022 of the 25 largest WebSoft international companies in the field of web and software technologies, of which 11 are based in the United States, 10 in China, two in Germany and one in Japan and South Korea. An in-depth analysis of the relevant Italian branches is also provided.
WebSoft: profits and profitability drive
In the first nine months of 2023, industry giants WebSoft have highlighted a solid improvement of its margins. La operating profitability (MON) increased by 31,5% compared to the same period in 2022, while the net profits recorded an acceleration of 46,4%, reaching record levels. On average, each operator generated a daily net profit higher than 30 million euros compared to 21 million in 2022 and 27 million in 2021.
In the 2022, the combined turnover of the top 25 WebSoft companies worldwide reached 1.792 billion euros, equivalent to 90% of Italian GDP. A context dominated by the United States (70%) and China (26%). Only a small 4% of revenues belong to groups from other nations
Le top three main ones companies are Amazon, Alphabet and Microsoft, which account for more than half of total revenues. Jeff Bezos' company, in first place since 2014, alone contributes over a quarter of the total (481,9 billion euros, of which 46,5% is generated by retail).
Interest rates don't stop giants
Despite rising interest rates, industry giants WebSoft show a liquidity growth of 11,6%, bringing the incidence on total assets to 24,2% at the end of September 2023 (compared to 23,5% in December 2022, higher than the 11,4% of large-scale manufacturing).
Beyond the half of the funds are invested in short-term securities: 360,5 billion euros, or approximately 13% of total assets. This increase in liquidity suggests the possibility of future mergers and acquisitions moves, as well as preserving the currency's power amid widespread inflation.
Boom for the Chinese PDD and DiDi, good Booking
In the first nine months of 2023, there is a notable increase in revenues for different groups. In particular, the Chinese PDD (PinDuoDuo and Temu) showed an increase of 75,0%, followed by its compatriot DiDi (+31,2%) and from the US Booking (+ 27,1%).
With regard to the industrial profitability, Microsoft leads the ranking for EBIT margin with 44,4%, followed by Oracle (43,7%), Adobe (34,2%), Meta (32,0%) and Booking (31,5%) . The average value of the sector stands at 18,4%.
2022 is an anomalous year
In 2022, industry giants WebSoft have experienced a anomalous year with the lowest revenue growth of the last four years, recording only a + 9,6 %. This result is significantly lower than the double-digit rates of previous periods (+20,9% in 2020 compared to 2019 and +24% in 2021 compared to 2020). There profitability has decreased, with an ebit margin of 14,7%, placing WebSoft multinationals in 5th place compared to other sectors.
However, if we exclude e-commerce and focus on the digital aspect, WebSoft's ebit margin reaches 23,9%, placing it in second place only after pharmaceutical companies.
At the end of last year the workforce of WebSoft almost counted four million people throughout the world, an increase of one and a half million units compared to 2019, of which +743 thousand hired by Amazon alone, the undisputed queen in terms of number of employees: 1.541 thousand at the end of 2022.
The 25 WebSoft companies: total capitalization of over 8 trillion
After the decline in 2022 which had brought the main 25 companies in the sector back two years in terms of stock market capitalisation, 2023 seems to mark the return of confidence in the stock markets. As of November 30, 2023, the WebSoft giants have achieved a capitalization of 8.767 billion euros, highlighting an increase of 47,5% compared to December 2022. An evident growth also in terms of representation on world stock exchanges, going from 6,9% of the overall value of world stock exchanges at the end of 2022 to 9,5% at the end of November 2023.
In comparison with Piazza Affari, despite the good performance of the Italian Stock Exchange in the first nine months of 2023, WebSoft companies remain unattainable, being worth overall over ten times the entire Italian stock exchange.
As of November 30, 2023, the capitalization podium it is occupied by Microsoft (2.581 billion euros), Alphabet (1.528 billion) and Amazon (1.384 billion). The best performances, between December 2022 and November 2023, were, however, achieved by Meta (+ 165,9%) and Uber (+ 123,0%).
WebSoft and taxes
In 2022, approximately one third of the pre-tax profit of the world's leading WebSoft companies is subject to taxation in countries with preferential taxation, generating tax savings of 13,6 billion euros in the year and accumulating 50,7 billion in the four years from 2019 to 2022.
The effective average rate stands at 15,1%, lower than the theoretical rate of 21,9%. In the period 2019-2022, Tencent, Microsoft and Alphabet benefited from tax savings of 19,2 billion, 12,3 billion and 7,1 billion respectively due to preferential taxation.
Starting from 2024, the law should come into force in Italy Global Minimum Tax, which will impose a15% rate on profits made by multinationals with an annual turnover exceeding 750 million euros.
WebSoft in Italy
Companies in the sector have a psignificant presence in Italy through controlled branches, mainly located in the North, especially in Milan and its province. In 2022, the combined turnover of the Italian branches reached 9,3 billion euros, with a total of approximately 26,4 thousand employees. Compared to 2019, there is an increase of approximately 11 thousand workers, mainly thanks to the hiring carried out by the Amazon group, which has the largest number of employees in the country with 16.250 units in 2022.
With regard to the tax contribution in Italy, in 2022 the branches of large WebSoft companies paid 162 million to the Italian tax authorities, resulting in an effective tax rate of 28,3%. Also considering the provision for the payment of the Digital Service Tax, the tax rate would rise to 36,0%.
