Global collaboration software spending reached $22.6 billion in 2020, according to an IDC report, an increase of 32.9% since 2019. As the Delta variant continues to spread, companies are delaying their return-to-office plans, driving online teamwork market growth.
September should have been the month when remote workers finally returned to the “old normal,” but many companies have changed their plans in light of the recent Covid surge. Tech giants such as Facebook (NASDAQ: FB), Google (NASDAQ: GOOG), and Amazon (NASDAQ: AMZN) stated that their employees would be authorized to work from home until 2022. Microsoft (NASDAQ: MSFT) announced it would postpone the return to its U.S. offices indefinitely.
A 40% Annual Revenue Growth
Unsurprisingly, the online productivity software market boomed in 2021. The necessity of remote work during the pandemic led to rapidly accelerating adoption rates. According to the recent Gartner’s report, almost 80% of workers now use collaboration tools, compared to just over half of workers in 2019, a 44% increase.
IDC’s latest data show that the top 20 collaboration software vendors saw a 40% annual revenue growth, on average, though Zoom outpaced the market with a 227.1% increase. Several factors suggest that profits will continue on their current upward trajectory.
For example, companies are now aware that collaboration technology offers valuable insights into business operations. Moreover, says IDC research director Wayne Kurtzman, if these tools are integrated with apps, such as CRM platforms, they could substantially improve customer experience.
What are the Opportunities for Investors?
The biggest providers of online productivity tools have already benefited from the growing market. In early September, the team collaboration platform ASANA (NYSE: ASAN) (LTSE: ASAN) reported financial results for its Q2 fiscal 2022. Dustin Moskovitz, co-founder and CEO, said the company saw particular success in its enterprise segment, where the number of customers spending is up 111% over $50,000.
But it’s not just big-name vendors like ASANA, Google, Zoom (VIE: ZOOM), Slack or Microsoft, that stand to benefit from the booming online productivity market. IDC expects collaboration technologies to boost revenues for a variety of market players. Last week, Adobe announced its plans to acquire Frame.io, a software company that lets content creators collaborate and edit media, for over $1.2 billion. A few days later, Microsoft acquired San-Diego based TakeLessons, a platform connecting students with individual tutors and helping tutors to build lesson plans.
Are Small Niche Players Eyeing Expansion?
Online Kanban boards and collaborative whiteboards, such as Miro and Mural, also offer interesting investment opportunities. Some of these emerging players are looking to find their niche rather than try to compete with the biggest vendors.
For example, New York-based VC fund Starta Ventures and several business angels recently invested $300K in Weje, a new productivity tool used by UC Berkley and other universities. The platform offers an all-in-one collaborative workspace, online sticky notes, and more. Evgeny Medvednikov, Weje’s CEO, believes the platform's competitive advantage lies in its comprehensive approach to productivity and content amplification for SMEs. The startup does not intend to compete with other productivity software market players; instead, it hopes to complement their services.
The global productivity management software market is expected to reach $102.8 billion by 2027, according to consulting firm Grand View Research. Small and medium-sized businesses will be the main drivers of this growth, analysts predict. Therefore the online productivity platforms that keep converting SMEs into paying customers could be a great long-term investment.
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