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Tech sector revenue growth has slowed over the past year to one of the lowest levels in recent years with weaker investment and higher costs.
Technology Investment Network (TIN) TIN200 Report says total revenue for the top 200 tech companies rose 7.7 percent to $17.95 billion over 2023, but was below the five-year 10.5 percent annual growth rate.
TIN founder and managing director Greg Shanahan said TIN200 companies operated in the business-to-business space and were less exposed to the drop in discretionary spending and the economic downturn.
"However, a slowing world economy was evident in investment trends and employment growth," he said.
"Investment in tech softened in early 2024, impacting earlier stage companies reliant on external investment. Globally TIN200 employment had negative growth of 1 percent -- the first decline in a decade of job creation."
Total underlying profit rose 21 percent to $2.49b.
Export revenue grew 8.8 percent to $13.5b over the year earlier, with fintech ($2.88b), healthtech ($2.87b) and software solutions ($1.79b) sectors reporting double-digit revenue growth.
"Healthtech growth was underpinned not just by the return of F&P Healthcare to double digit growth but by good long-term performances from AFT Pharmaceuticals, Aroa Biosurgery, Pacific Edge and Volpara," Shanahan said.
Fintech sector's Xero and payments solution provider Windcave saw combined earnings growth of more than $400m.
Shanahan said the sector was also seeing a reinvigoration of those companies with a second generation of chief executives often guided by the founder.
"They've been typically private where the founders had a level of expertise. They've been able to make the company cash flow positive early and built it up over a long period of time," he said
"And so what we're seeing, particularly this year, is exciting growth of second generation companies -- companies like Gallagher's, companies like Tate Electronics, Trimax (Mowing Systems), Buckley Systems.
"When you've got a couple of lifetimes to add value, you know, 5 or 10 percent increments every year in terms of adding more value, makes a big difference over an extended period."
Shanahan said the outlook for 2025 was for continued growth given early indications of an improving economy.
"Early indicators suggest an improving investment climate and market disruption expanding beyond health and banking into sectors impacted by climate change, such as power generation, transportation, and waste reduction, all supporting environmental sustainability.
"I think 2025 will be a good year. I think the longer term trend for the tech sector is good. As I said, this is one of the lowest growth rates we've had, but 8 percent is not shabby.
"What remains true, and is is consistent, is that the two strongest market sectors, health tech and fintech continue to enjoy double-digit growth, and there's a growing number of high performance companies in those ecosystems.
"So the future is bright. I think that this year, tech exports were slightly less than international tourism, but I think it will return to become the number two source of offshore revenue, and ultimately, number one."
