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NZ tech sector continues upward trajectory as export revenue grows

Export revenue for New Zealand tech companies is on the rise, as an increasingly diverse international market heightens its demand for Kiwi-designed and manufactured tech products, according to a new report.

The 16th annual Technology Investment Network (TIN) Report launched this week at Tech Pulse 2020 shows export revenue for the TIN200 companies rose by 10.6% to a total of $9.4B this year.  

TIN200 revenue reached $12.7B in 2020, slightly less than the $1B annual growth recorded previously, but overall, the TIN200 shows ongoing strong growth in the face of tough economic headwinds.

This year’s TIN Report provides a partial view of the impact the COVID-19 pandemic has had on the tech sector’s performance in 2020 so far.

“With continuing double-digit export growth creating record employment growth, the TIN200 companies are well positioned in terms of scale, growing profitability and global spread to absorb the negative impact of COVID-19 and take advantage of the opportunities for growth as a result,” says Greg Shanahan, founder and managing director of TIN.

TIN200 companies continue to demonstrate strong year-on-year growth.

In 2020, with the impacts of the COVID-19 pandemic starting to take global effect in the final quarter, total TIN200 revenue reached $12.7B. This is up 8.3% - or $972m – on 2019, but a dip in overall revenue growth, dropping below the $1B recorded last year.

More than 50,000 staff are now employed globally by the TIN200.

The group now employs nearly 55,000 staff around the world, of which over half are employed in New Zealand. These employees are paid over $4.5B in wages – another milestone never before reached by the TIN200. The average wage for a TIN200 employee is more than $82,000.

The report showed a record number of companies now have revenues of over $50m.

In 2015, 38 tech companies in New Zealand had revenues over $50m. Five years later, that has increased to 56, and with it the capacity of these companies to scale even further and explore new market opportunities from a position of strength. Companies with revenue of over $50m accounted for 70% of growth in the TIN200.

According to the findings, ICT firms show strength yet again, lifting both their TIN200 presence and profitability.

With 101 companies now in the TIN200 (up from 94 last year), ICT continues to be the driving force behind the New Zealand tech sector, growing its revenue by 11.4%, comparative to the 8.3% overall growth of the TIN200. The ICT sector’s drive for profitability was also rewarded with a 38.7% lift in reported EBITDA.

New jobs in the tech sector are surging to record levels, the report shows.

Over 4,000 new jobs were created by the TIN200 companies in 2020 – an 8% lift on 2019 – pushing the total number of NZ tech sector-generated jobs internationally up to a record 55,167. Relative to the increasing number of ICT firms in the TIN200, jobs in that primary sector increased by 3,049, while the number of High-tech Manufacturing rose by 977.

The report found Fintech surged again as the fastest-growing secondary sector.

In a socially-distanced world, mobile and digital solutions that enable money to flow through economies without personal contact are increasingly in demand, and the NZ tech sector delivered, with Fintech's registering as the fastest growing sector on the TIN200 for the fifth consecutive year. With a 5-year CAGR of 31% and several new company arrivals on the TIN200 in 2020, close attention will no doubt be focused on the NZ Fintech sector in 2021 and beyond.

Public companies are leading the growth of the TIN200.

Revenue growth from Public Companies in 2020 was exceptionally strong, with the 25 listed companies on the TIN200 representing nearly two-thirds (62%) of the total revenue growth –  an impressive growth rate of 20% on last year, led by some of the biggest companies on TIN’s list.

Fewer TIN200 Rising Star companies in 2020 still account for nearly half the growth

This group of 22 companies from the TIN200 in 2020 that demonstrated sustained high-growth over three years was down a little from 2019’s record high of 29 companies, and yet they represent 49.5% of the overall growth in 2020, compared to 46.6% in 2019 group.

The Wellington/Manawatu region shows strongest percentage growth, but Auckland still leads on revenue.

With 120 of the TIN200 companies headquartered in Auckland, New Zealand’s largest city continues to be the powerhouse of the NZ tech sector. However, the region containing the nation’s capital continued to perform well also, with Wellington region companies generating nearly a quarter of the TIN200 revenue (23.5%) and at the fastest growth rate of 10.6%.

“The key phrase that has resonated with me throughout 2020 is that we may not have all the answers, but we do have purpose," says Shanahan.

"In the midst of this difficult year, and certainly for the years ahead, TIN’s purpose has never been clearer to me than it is now. We pursue a simple mission: to help facilitate the growth of the technology sector in New Zealand."