With this first article, as part of our new free to access data-based section, we have chosen to look at the top-level numbers of ‘Big Tech’ businesses, namely, Amazon, Apple, Alphabet, Microsoft and Facebook; and then compare the R&D spends each of the companies.
Firstly, lets look at the current market cap, number of employees and top-level revenue numbers for these top five players:
Current Market Cap
The numbers below are correct as of the 15th of June 2021.
Big Tech Revenues (2016-2020)
Number of Employees
The total number of employees for each company, as reported per end of 2020.
Now, lets take a brief look at the Cost of Goods Sold (COGS) for each of these businesses.
As a cost of doing business, COGS is included on any corporates income statement. Knowing the cost of goods sold helps us to better estimate each players net income, or bottom line. For example, if the COGS number increases, then the net income number will reflect that, by decreasing. While this is good for income tax purposes, the business will have less profit for its shareholders. As a result, most businesses within the tech sector attempt to keep their the COGS number low so that its net profit will be optimised.
Big Tech COGS (2016-2020)
As you can imagine, the EBITDA numbers for these companies are astronomical. Amongst the very best in the world, with Apple and Microsoft leading the way.
Big Tech EBITDA (2016-2020)
Now lets take a look at the R&D spend numbers for each of constituent businesses. These return quite surprising results, especially when you view the percentage of the same years revenue as R&D. Whilst that is perhaps not the ideal comparison from a analysis basis, I think when trying to measure and prognosticate future performance of the business within the marketplace, it is worthy. It also explains much about the product development activities and in-turn where the businesses are with lifecycle of this fast moving sector.
Big Tech R&D Spend (2016-2020)
|R&D Spend ($millions)||2020||2019||2018||2017||2016|
Big Tech R&D Spend as a Percentage of Revenue (2016-2020)
|R&D Spend (%)||2020||2019||2018||2017||2016||5 Year Avg|
Interesting, the average percentage of revenue ‘Big Tech’ spend on R&D over the past 5 years works out at 13.36% if you include Apple with its hardware product bias, or 15.29% if you stick to primarily software vendors.
In future articles we will look at these numbers in comparison to other high revenue platform players many consider tier two, in order to see how they compare. For example Twitter, which in 2020 spent 23.5% of its same year revenue on R&D in order to better compete, or Salesforce which spent 16.93% of same year revenue on R&D activity.
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Thanks for reading the article. The team at Platform Executive hope you have enjoyed this data-based content. Automatic translation from English to a growing list of languages via Google AI Cloud Translation. Original reporting in English by Rob Phillips.
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