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NZ tech sector gains momentum with export growth

New Zealand tech companies are experiencing significant growth driven by rising export revenue. Thie trend seems to be due to an increasingly diverse international market that is driving demand for NZ designed and manufactured tech products according to a recent report.

Technology Investment Network (TIN) Report conducts independent market research and collates information from approximately 1000 companies, reporting on the largest 200 (TIN200). The research is collaborative with widespread industry support and participation.

Key sections of the report include analysis of ownership structure, market sector analysis, profiles of the industries fastest-growing companies, economic impact review, analysis of R&D, profiles of promising early-stage companies and a look at which New Zealand regions have the greatest growth in technology.

The report launched earlier in November shows export revenue for the TIN200 companies rose by 10.6% to a total of $9.4B this year. The report reflects, to some extent, the impact that the pandemic has had on the tech sector’s performance in 2020. None the less, the overall TIN200 trend indicates strong growth despite adverse tough economic conditions globally.

With the impact of the 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.

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.

A strong indicator of the promise the group holds, and by extension the sector, is the annual revenues of the companies. In 2015, only 38 tech companies in New Zealand had revenues over $50m; in 2020, this has grown to 56 companies.

Companies with revenue of over $50m accounted for 70% of growth in the TIN200. Able to scale further and explore new market opportunities from a position of strength, these companies are in a good position to grow.

Over 4,000 new jobs were created by the group in 2020, an 8% increase from 2019. With this, the total number of NZ tech sector-generated jobs internationally was 55,167 – of which over 50% are employed in New Zealand. These employees earned about $4.5B in wages; another first for the TIN200, with the average wage for a TIN200 employee topping $82,000.

In a COVID-19 socially-distanced world, contactless transactions are the norm, driving mobile and digital solutions. Not surprisingly, Fintech was the fastest-growing sector on the TIN200 for the fifth consecutive year. With a 5-year CAGR of 31%, new entrants and booming demand, much will be expected of the NZ Fintech sector in 2021 and beyond.

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.

With 120 of the TIN200 companies headquartered in Auckland, New Zealand’s largest city continues to be the powerhouse of the NZ tech sector. The capital region performed well too, with companies in the Wellington region generating over 23% of the TIN200 revenue and registering the fastest growth rate at 10.6%.

The founder and managing director of TIN felt that the TIN200 companies are well-positioned in terms of scale, growing profitability and global spread to absorb the negative impact of COVID-19. The ongoing double-digit export growth with the accompanying increased employment allows the sector to take advantage of the opportunities for growth as a result.

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