According to Sarah Hindlian-Bowler, Macquarie’s Senior Software Analyst, these technologies have seen sizable uplifts in both demand and opportunity with software sector valuations rebounding above prior 2019 highs.
“The software sector is driven by the major digital, collaboration and cloud security trends that must be enabled in today’s virus-wary workforce,” says Hindlian-Bowler. “These tools allow organisations to connect across geographies, streamline tasks and automate customer experiences, influencing the ways in which companies will operate post-pandemic.”
As businesses embrace new remote working models, consumers are shifting their habits as well. According to Macquarie’s US Equities Research team, there has been a collective shift to virtual and streamed experiences across almost all consumer sectors, including media, advertising, gaming, leisure and lifestyle.
“Prior to COVID-19, less than 15 per cent of global retail sales were made online,” said Paul Golding, Macquarie’s Consumer Lifestyle Analyst. “E-commerce has since grown to 27 per cent as the online shift gathers momentum.”
Golding also highlighted how the entertainment industry is adapting to today’s digital transformation with companies like LiveNation investing in live-stream technology for virtual or online concerts and events.
Similarly, Chad Beynon, Macquarie’s Gaming and Leisure Analyst, noted how online gaming and sports betting has emerged as a pastime in the United States, especially among the Millennial and Gen X demographics.
“By 2025, we expect sports betting in the US to become a $US20 billion revenue industry – up from less than $US1 billion in revenue today,” Beynon said. “This would make the US market comfortably larger and more mature than those in the UK and Australia.”
Within the media and advertising space, Senior Analyst Tim Nollen has observed the rise of Connected TV (CTV) as a major trend, with platforms like Roku and Amazon Fire TV leading the charge in the US.
According to Nollen’s research, 71 per cent of American households currently own a CTV device, with global advertising spending on these platforms projected to double to $US12.5 billion nationally and reach $US41 billion globally by 2022.
As a result of COVID-19, the TV upfront market has been thoroughly disrupted as linear TV consumption declines and cord cutting has accelerated by 5-6 per cent annually.
The latest trends in software services and technology were among the themes explored at Macquarie’s recent 2020 Software Corporate Day, hosted by the US Equities Research team. Presenters included leaders from companies including Proofpoint, Dropbox and UiPath, whose technologies help organisations improve cloud security, data storage and process automation, respectively.
“In this widespread work from home initiative, organisations are looking at how to enhance their security architecture,” said Gary Steele, CEO of Proofpoint. “It is now more important than ever to protect individuals and their data.”
Lev Finkelstein, VP of Corporate Finance and Strategy at Dropbox, echoed the sentiment. A cloud-based workplace for digital content that already has 600 million registered users and 550 billion pieces of content, Dropbox is continuing to see new and unexpected opportunities arise from the current environment.
“Our product is designed to keep teams and files in sync anytime and anywhere, which is exactly what people need right now,” Finkelstein said.
AI and automation continue to be top-of-mind for businesses as well. A leader in the automation space, UiPath provides a complete software platform to help organisations efficiently automate key business processes.
Vijay Khanna, the company’s Chief Corporate Development Officer, cited the ways automation can help essential businesses automate key tasks. For hospitals, this may include automating patient credentialing, records management processes and other healthcare workflows.
“Automation provides a competitive advantage, which is driving growth,” said Khanna. “Our pipeline has never been stronger.”
Ms. Hindlian-Bowler believes that the future of work and consumption are permanently altered by COVID-19, resulting in a large push to digitally transform businesses and consumer experiences despite many areas of the economy being shuttered.
“Every organisation today must think about business continuity planning and safety measures for their employees, and further, find ways to minimise costs,” says Hindlian-Bowler. “Software is one of the most important tools to enable the future of work, connecting people across geographies and time zones while also helping to automate manual and repetitive tasks. As we look at an altered future, the digital revolution is only accelerating.”