CANADIAN BUSINESS SPENDING TRENDS | Q2 2024
AI spending surges as Canadian SMBs seek productivity in an economic slump
By Andrew Dale and Mako Cheung
Q2 2024 Canadian business spending trends display a conservative approach to overall spending
Float’s Canadian Business Spending Trends reporting provides a comprehensive analysis of business spending trends across various sectors of the Canadian economy, highlighting key areas of growth and contraction over the specified period. It utilizes data from a cross-section of over 1,200 Canadian SMBs to offer insights into overall economic health and investment patterns. The following charts highlight the Q2 2024 findings from Float’s Canadian SMB Insights team.
Spending flatlines as SMBs uncertain about economic outlook
Average spending of Float customers increased by just 0.7% from the end of Q1 2024 to the end of Q2 2024. A 13.5% year-over-year decrease in growth rate.
While businesses are maintaining a conservative approach, they aren’t scaling back on spending—an indication that companies are cautiously optimistic about a Canadian economic recovery.
“With Canadian labour productivity at crisis levels, it’s encouraging to see Canadian SMBs dramatically increase their investment in AI. It’s a promising leading indicator of Canadian businesses generating more value through investments in innovation and tools that reduce manual employee tasks in favour of more high impact work.”
Rob Khazzam
CEO and Co-founder, Float
Larger businesses invest in growth while smaller SMBs remain cautious
Companies with greater than $1 million in annual revenue have steadily increased spending over the last four quarters, primarily driven by a 60% year-over-year increase in advertising spend. Meanwhile, spending for businesses under the $1 million revenue mark remains flat.
This indicates a greater appetite for larger SMBs to invest in growth and expansion strategies while their counterparts reserve cash for operational expenses in a precarious economic climate.
Business travel takes back to the skies
Canadian businesses are sticking to their spending patterns in the first half of 2024, with one notable exception: travel.
The 20% quarter-over-quarter increase in travel expenditure signals a slow but steady return to business travel after several years of slowdown.
“SMBs are the lifeblood of Canada’s economy, and an essential part of the country’s economic recovery. We are seeing signs of mid-market and larger SMBs leading the way in investing for growth, and hope to see the micro-SMB sector follow suit, accelerating economic growth and ensuring a more sustainable and equitable future for all Canadians.”
Andrew Dale
SVP, Operations and Financial Products, Float
Medium SMBs go all in on AI, doubling spend in Q2
Medium SMBs’ average AI spending almost doubles from Q1 2024 to Q2, just shy of reaching parity with their larger counterparts. Adoption among small SMBs lags, but investment in AI is still up 91% over the previous year.
This highlights a growing demand for productivity and integration of AI in business strategy for companies of all sizes.
Growing AI competition: ChatGPT market share dips for the first time
Investment in AI continues to rise, with 36% of all Canadian SMBs spending dedicated to AI in Q2 2024, a jump over the previous year’s spending of 23%.
ChatGPT continues to dominate the market but faces rising competitive pressures, with Anthropic and Perplexity now holding 8.2% of the market share among Float customers.
Meanwhile, subscriptions of ChatGPT among SMBs drops to 91.74% in Q2 2024 from 96.83% in the previous quarter.
According to Float’s Canadian Business Spending Trends report, Canadian SMBs are spending approximately 22% more in Q2’2024 compared to Q2 last year.
SMBs can use AI solutions to drive productivity and improve decision-making to generate a competitive advantage. From market research and automation to content creation, AI tools, such as ChatGPT, Perplexity, and Anthropic, can help SMBs make the most of their existing resources.
According to Float’s Canadian Business Spending Trends report, Canadian SMBs are spending the most on software and ads. With businesses dedicating 29% and 27% of their total spend respectively.
About Float
Float is a business finance platform built to simplify business spending and drive savings for Canadian SMBs. For media inquiries or further information on Float, please contact Nina Angelo at press@fr.floatfinancial.com
For media inquiries contact press@fr.floatfinancial.com.