Software Publishers

Industry Profile Report

Dive Deep into the industry with a 25+ page industry report (pdf format) including the following chapters

Industry Overview Current Conditions, Industry Structure, How Firms Operate, Industry Trends, Credit Underwriting & Risks, and Industry Forecast.

Call Preparation Call Prep Questions, Industry Terms, and Weblinks.

Financial Insights Working Capital, Capital Financing, Business Valuation, and Financial Benchmarks.

Industry Profile Excerpts

Industry Overview

The 10,700 software publishers in the US produce and distribute computer software. Major product categories include application software publishing, system software publishing, and resale of merchandise. Firms are increasingly delivering software through cloud-based services (Software-as-a-Service or SaaS), in addition to on-premise products.

Technology Drives Constant Change And Investment

The information technology industry is characterized by rapid change and constant evolution.

Talent Shortage

Software developers are in short supply and many publishers are resource-constrained due to a shortage of skilled workers.

Industry size & Structure

The average software publisher employs 46 workers and generates about $35 million annually.

    • The software publishing industry consists of about 10,700 firms with 14,200 establishments that employ over 500,000 workers and generate about $376 billion annually.
    • The industry is concentrated at the top; the top 50 companies account for about 69% of industry revenue.
    • Large companies include Microsoft, Oracle, IBM, and Symantec. Large firms may generate a substantial percentage of sales overseas.
    • Companies that offer primarily cloud-based services may be classified under the Census as Data Processing, Hosting, and Related Services. Software publishers may offer hybrid products that combine on-premise, private cloud, and public cloud services.
                                    Industry Forecast
                                    Software Publishers Industry Growth
                                    Source: Vertical IQ and Inforum

                                    Recent Developments

                                    Dec 4, 2022 - Business Software Providers Say Customers Are Hesitant
                                    • Customers of business software companies such as Salesforce, Okta, and CrowdStrike Holdings are taking longer to sign deals and being more cautious with their spending in response to a challenging economy, according to The Wall Street Journal. Many firms in the once-booming business-software sector, which benefited from years of strong demand, are monitoring their own expenses and re-examining hiring plans as a result. Workday, for example, plans to pull back on hiring in the fourth quarter of 2022. The provider of cloud applications for finance and human resources expects the move to help help expand margins in fiscal 2024. Salesforce said that it is benefiting from recent moves to pare its workforce costs and is continuing to review its real estate-footprint.
                                    • Technology startups plan to hire some of the software developers laid off by industry giants like Twitter, Lyft, and Facebook parent company Meta, according to The Wall Street Journal. Kathy Zhu said she is lining up candidates for roles at Streamline AI, the two-year-old tech startup that she co-founded. They include prospects from “two or three companies that just had big layoffs,” she said. “There’s an abundance of talent right now, because of these layoffs,” Zhu said. “A few years ago, there was no way we could’ve attracted candidates like this.”
                                    • A growing talent pool isn’t likely to lead to a full-blown hiring boom by startups, however, according to Pitchbook senior analyst Kyle Stanford. “Even well-funded young companies will be more strategic in their hiring practices than we would have seen a year ago,” Stanford said. Large tech companies cutting jobs because of the souring economic climate “should be a warning to small companies to preserve runway and opt for a sustainable growth, if growth is still possible,” he added.
                                    • Some software companies are prioritizing existing customer revenue goals over new sales, according to a survey conducted by research firm Alloy. About 73% of B2B software companies have accelerated existing customer revenue goals over the past 12 months while 41% of these brands are decreasing their emphasis on net new sales due to the prioritization of up- and cross-selling initiatives. Software brands are shifting their focus to a customer lifetime value, according to Anna Ruth Williams, chief strategy officer and partner at Alloy.
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