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Report: Software Companies More Profitable

A report on 284 publicly traded software companies shows that profits in the space have increased by almost five-fold since 2003 to $75 billion, according to a study released yesterday.

Software companies are more profitable than ever before, according to a report released yesterday by Toronto-based Material Minds, a company that provides efficiency consultation services for small businesses.

The study of 284 publicly traded software companies found that the net annual revenue of businesses in the space has increased almost three-fold since 2003 to $470.

And the key component driving this growth? An increase in employee productivity and efficiency.

Here are the key findings from the study:

  • The total number of employees in the space has more than doubled from 447,000 in 2003 to 1.6 million.
  • The average revenue per employee at software companies has increased from $195,000 in 2003 to $287,000 in 2012.
  • The average net income per employee is $3,700, a significant leap from a net loss of $61,600 in 2003.
  • 62 percent of software companies are now profitable versus 46 percent in 2003.
  • Total net income for these companies increased by 477 percent since 2003 to $75 billion, $13.9 billion of which was generated by just the top three firms.

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