Published on the 01/11/2019 | Written by Hayden McCall
52,000 strong tech industry network effect aimed at changing the nation, for good…
The founder and managing director of the Technology Investment Network, Greg Shanahan, has used its 20th anniversary to implore the industry to do more to diversify the nation’s economy through technology, innovation and increased R&D.
In announcing the 2019 ‘TIN200’ – the top 200 tech companies – have broken through a record $12 billion mark in total revenue, $8 billion of which was in export earnings, Shanahan (pictured) said the organisation is committing towards making tech companies an increasing force for good in New Zealand, utilising their talents and robust networks to help address economic disparity and bring about genuine societal change.
“In 20 years’ time, when we are looking back on another two decades of evolution of the New Zealand tech sector, I’m confident that we’ll be able to trace the threads back to the TIN Report of 2019 and see how the successes of today translated into the strong foundations of a tomorrow that brought benefit and prosperity to all,” said Shanahan.
“[Tech] has the potential to become our country’s leading source of offshore income.”
The 2019 results, launched at a gala awards event in Auckland last night, equates to double-digit growth and total growth of over a billion dollars for the second consecutive year, continuing a surging double-digit performance for the sector.
In other firsts, the report also shows that investment in R&D has surpassed $1 billion for the first time, and employment numbers in the tech export sector have exceeded 50,000 staff globally, with half employed locally.
“We’re delighted to present these record-breaking findings on the performance of the New Zealand tech companies that are exporting Kiwi innovation to the world,” said Shanahan. “Through an overwhelming number of key metrics, our tech export sector is sending a strong message that it has the potential to become our country’s leading source of offshore income. We’re very excited to see the potential that this long-term sustainable growth presents.”
With 52,000 employees globally, averaging an income of $82,000 each, the sector makes a compelling case for an increased focus and understanding from the broader economy when it comes to diversifying New Zealand away from its traditional reliance on the agricultural sector. At $8.7 billion, the TIN200 in aggregate is the third largest contributor to New Zealand’s exports, behind dairy and tourism.
Source: TIN Report 2019
Shanahan also noted that future growth looks assured with the TIN ‘Next100’ list outpacing the TIN100 in terms of growth rate, a sign that the tech sector is developing a strong pipeline of emerging new companies in behind the established firms.
The TIN Report, now in its 15th year, monitors the performance of New Zealand’s top 200 (TIN100 and Next100) largest technology exporters in the areas of Information and Communication Technology (ICT), High-tech Manufacturing and Biotechnology, approaching almost 1,000 companies for its survey this year.
Perennial top performer Datacom Group retained its position as #1 on the TIN200 list, also achieving #1 on the growth rankings producing an estimated $188m in additional revenue.
90 Seconds was the recipient of the TIN Rocket Award for 2019 after achieving the biggest jump in TIN200 rank (climbing 29 places), after the company attracted additional growth capital and relocated its HQ to Singapore. An increase in offshore investment was highlighted with deals announced by seven companies that added to $326 million, alongside eight that were sold to offshore interests, releasing equity and attracting further investment.
David Downs, general manager, New Zealand Trade and Enterprise, led a discussion on the technology sector’s societal impact, with input from headline speakers Rebecca Tohill, CEO and Founder of Fusion5; Greg O’Grady, Co-founder and Chief Scientific Officer, Surgical Design Studio; and Maru Nihoniho, Founder and Producer, Metia Interactive.
Copies of the 2019 TIN Report, which is sponsored by New Zealand Trade and Enterprise (NZTE), Absolute IT, BNZ, EY, James & Wells, and NZX, can be ordered here. Launch events are also planned for Christchurch and Wellington next week.
The key highlights from this year’s report are:
- TIN200 companies continue their strong upward trajectory, achieving a consecutive year of $1.1 billion growth in revenue for the first time
Total TIN200 revenue rose to a record $12.1 billion in 2019, growing by 10.2 percent or $1.1 billion. This is the first time that the TIN200 has achieved two consecutive years of over $1 billion revenue growth.
- The strength of ICT firms continues to drive the New Zealand tech sector forward
The 95 ICT firms in the TIN200 delivered another impressive year, increasing turnover by $643 million or 15.9 percent. This accounts for well over half of the TIN200 growth, and this compares favourably to the 7 percent and 6 percent growth rates of the High-tech Manufacturing and Biotech primary sectors respectively. Fintech remains a key growth sector, after another strong year of 26.9 percent growth.
- Over 50,000 staff are now employed globally by the TIN200
The group now employs nearly 52,000 staff around the world, of which over half are employed in New Zealand. These employees are paid over $4 billion in wages – another historic milestone never before reached by the TIN200. The average wage for a TIN200 employee is more than $82,000.
- Traditionally strong export markets continue to drive TIN200 export growth of 11.3 percent
Offshore revenue for the TIN200 reached a record $8.7 billion on the back of 11.3 percent export growth. Australia and North America maintain their position as the two largest export markets, both growing by 9.7 percent to contribute nearly 50 percent of total TIN revenue. Europe, however, topped in growth rate after an 18.5 percent revenue rise.
- Significant change is seen in the ownership landscape following considerable foreign interest
A total of seven TIN200 companies received offshore investment with $326 million invested between them. With eight TIN200 companies also acquired by offshore interests, there is a clear shifting dynamic in the TIN200 ownership environment.
- The Wellington region demonstrates the strongest growth in both dollar and percentage terms
While growth was seen in all regions across NZ, Wellington stands out as the fastest growing, increasing sales by $386 million or 17.5 percent. This puts Wellington alongside North Auckland and Otago as the only three regions with double digit 5-year CAGRs, proving they are consistent drivers of overall TIN200 growth.
- Innovation remains critical for the NZ tech sector
R&D continues to be a key focus for TIN200 companies and has reached over $1b for the first time in TIN Report history. This has pushed it above the 10 percent of revenue mark, with TIN companies allocating 11.1 percent of revenue toward R&D activities.
EY Ten Companies to Watch 2019: TIN100 companies with the largest revenue growth in 2019
|Rank||Name||Growth ($000)||2019 Revenue ($000)|
|7||Transaction Services Group||$29,000||$155,000|
|8||Grinding Gear Games||$26,852||$99,246|
|9||Vista Group International Ltd||$24,100||$130,700|
Source: TIN Report 2019
*Calculated by TIN based on the new NZIRFS standard rolled back and applied to 2018 using the Datacom confirmed growth figure of 17.0 percent