TIN200: Solid growth for tech firms but restructuring sees jobs decline
The Technology Investment Network’s snapshot of the New Zealand tech sector paints a picture of an industry in rude health, but with fewer people working in it than last year.
Our top 200 tech companies generated $17.95 billion in revenue in the last year, up 7.7% from 2023, with offshore revenue accounting for $13.52 billion, growing 8.8%.
R&D spending, seen as essential to innovation and productivity gains grew 8.9% to collectively total nearly $2 billion spent among those 200 companies, which spend 11% of their revenue on R&D. Despite a tough economic environment with tech companies impacted by inflation and high interest rates, they managed to grow profit (EBITDA) 21% to a total of $2.06 billion.
Source: Technology Investment Network
The only area going backwards was the employee headcount across those 200 companies, which dropped 0.8% to 59,774 people. That reflects the broader trend across New Zealand and in many parts of the world where our tech companies have a presence. Layoffs have been common as companies seek to rebalance their organisation in cost-cutting drives that started in earnest back in 2022.
“Restructuring in the ICT sector dragged totals down, with some 1,936 staff shed globally from firms including Xero, Datacom, Magic Memories and Soul Machines,” the TIN research team pointed out.
“Hi-tech Manufacturing losses were offset by Fisher & Paykel Healthcare and Tait Communications, who combined for nearly 950 new hires, lifting the sector’s employment by 5.0% to 27,178 global staff.”
Early-stage Investment in tech firms was subdued too - a total of $349 million across 144 deals, with the bulk of the money invested in companies in the Auckland region.
The sector’s overall growth in the last year is behind the average over the last decade. But you only need to look at how the key metrics have tracked over 2014 - 2024 period to see the huge gains the tech sector has made.
Source: Technology Investment Network
Fintech, in particular, has become the highest-growth subcategory of the tech sector, thanks in no small part to Xero, which accounts for 60% of overall fintech revenue.
The number of companies with $100 million or more in annual revenue has jumped from 17 to 36, a sign of a maturing industry where being bigger enables companies to operate on a global level and achieve economies of scale.
TIN’s analysis of key markets for our tech companies reveals a large concentration in our traditional markets, with New Zealand, Australia, and the United States accounting for 74.8% of revenue. That points to opportunities to grow in Asia, the Middle East, the Americas and Europe, which recorded a healthy 15.7% growth.
Source: Technology Investment Network
2024 TIN TECHNOLOGY INDUSTRY ANALYSIS REPORT - Highlights
TIN200 revenue reached $17.95 billion, a 7.7%, or $1.28 billion increase over 2023, though below the index’s five-year annual growth rate of 10.5%.
Total offshore revenue was $13.52B, up $1.10B or 8.8% on 2023. Tech falls back to NZ’s third largest export earner behind dairy and tourism.
Europe was the strongest growth region, with revenue lifting 15.7% to $2.37B, followed by Australia, up 7.2% to $4.64B.
Employment fell -0.8% to 59,774 ending ten years of continuous growth, as leading companies restructure.
Total EBITDA profit lifted 21.0%, or $432m to $2.49B overall, with spending discipline taking effect.
Fintech ($2.88B) tops Healthtech ($2.87B) as the country’s largest vertical, followed by Appliances ($1.85B) and Software ($1.79B).
