Revenue per EmployeeWritten by Ophir Gottlieb, 12-16-2015
The amount of revenue per employee a firm drives is a critical metric in assessing future growth and growth margins. The largest money managers and hedge funds use this data to gain an edge.
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When firms drives profitability, they can do it in several ways:
1. Increase sales more than costs increase.
2. Reduce costs by more than sales increase (or decrease).
3. A combination of the two.
Here are the largest companies in technology, ranked by their revenue per employee in the trailing-twelve-months.
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It should come as no surprise that firms like Netflix, Apple, Facebook, Google and Microsoft are the top five. What's astonishing is that both Apple and Microsft have over 110,000 employees, while Netflix, Facebook and Google have 2000, 12000, and 60000 employees, respectively.
In fact, while AAPL and MSFT have similar numbers of employees, AAPL generates $2.1 million per employee while MSFT generates bout $800,00. That's beyond astounding and gone into incredulous.
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We can do this same ranking visualization for all sectors with companies above $100 billion in market cap.
Don't feel too bad for Oil & Gas, both XOM and CVX show up as numbers one and three in this ranking. While that may stun you, the real shocker is Gilead. CML Pro has a full premium research report on Gilead and the ridiculousness of the most successful biotech ever.
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WHY THIS MATTERS
The top analysts, asset managers and hedge fund managers are keenly aware of the trends in revenue per employee for the firms they either invest in, or are considering investing in as higher numbers apply a multiple to earnings off of revenue. Did you ever wonder who some firms have higher price to sales values than peers? Ye, growth is a part of it, but friends, the top 1% are going way further than that.
If we're not using this data, then we're trading against people that simply have more information then we do. That is a wealth losing strategy.
Data like this but even deeper has, until now, been kept away from retail investors. You can get it for a six-figure data feed or a $2,000 a month Bloomberg terminal. The information asymmetry that exists between pros and non-pros has transferred massive wealth to the top 1% from the rest of us. That information asymmetry is no longer acceptable to us.
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