Decoding the Deloitte Fast 50
Deloitte has released its annual Fast 50 list of New Zealand's most rapidly growing companies.
It's great to see a celebration of business success.
Yet (he wrote, determined not to slip into Bad Cop mode), I would be celebrating even more if Deloitte published dollar revenue figures for each company as well as percentages (we do know some from public results; see links right).
And if we knew how profitability does, or doesn't, weigh into the Fast 50 equation. A loss isn't a bad thing per se for a startup. Xero and 2degrees are very upfront about the fact they're prioritising expansion over profitability. Still, it would be intriguing to know how the bottom line factors in, if at all (UPDATE: Deloitte NZ spokesman Matt Huntington told NBR, "The rankings are purely based on revenue growth.").
To qualify for the Fast 50 2012, a business had to have a minimum $300,000 revenue in 2009/2010.
That means the list is a very broad church. Small businesses like respected boutique publisher Freeman Media (seven staff) rub elbows with the likes of 2degrees (750 staff, 1 million customers).
Of course, it's a lot easier for a small enterprise or start-up to register 1000% plus growth in a three year period.
Adding some hard revenue figures would put the Fast 50 into a lot sharper perspective.
Past Fast 50 chart toppers
2001: TelstraSaturn, telecommunications
2002: Marshal Software, internet security
2003: Prolificx, electronics
2004: Trade Me, online auctions
2005: 42 Below, vodka
2006: HRV, home ventilation
2007: Energy Mad, eco-friendly light bulbs
2008: Watson & Son, manuka honey/healthcare
2009: New Zealand Honey, honey products
2010: Telecom Rentals, finance for telecommunications services
2011: Powershop, online electricity retailer
Looking at the list of historic Fast 50 winners (above), sometimes superfast growth is an indicator of future success and a tasty trade sale (Trade Me, Marshal Software, Prolificx, 42 Below); sometimes velocity has caused major speed wobbles (Energy Mad).
And even looking at this year's top 50, events have already over-taken Snapper (number 18), which is looking to claim up to $20 million from Auckland Council in the wake of being fired from the mammoth Auckland Transport e-ticking project. As with any Fast 50 company that's a subsidary, it's fate is to a degree out of its hnads. Snapper's 2013 fortunes will depend, to a large part, on how much stomach parent company Infratil has for a High Court brawl with the Auckland Transport.
Here's what this year's top 10 looks like:
Rank. Company: 3-year growth
1. Pulse Utilities NZ: 2637%
2. PowerKiwi: 1916%
3. McCashin's Brewery: 1836%
4. Night 'n Day Foodstores: 952%
5. Konnect Net: 906%
6. 2degrees: 538%
7. Powershop: 529%
8. Xero: 514%
9. Mediacom*: 488%
10. Ecoya: 480%
* The NZ subsidiary of the multinational ad agency of the same name
One trend is clear: electricity retailing is hot.
Last year, virtual electricity retailer Powershop claimed the top slot (it's number seven this year).
This year, electricity retailers Pulse Utilities and PowerKiwi have claimed the number one and two positions.
Pulse is a good news turnaround story, having been bailed out by lines company Buller Electricity, which injected cash and took a majority share.
The Auckland-based company is listed on the NZX's less-regulated alternative board (NZAX:PLU). In its most recent full-year filing, for the 12 months to March 31, 2012, Pulse said it made a $163,000 profit (against a prior-year loss of $7.6 million). Revenue increased 138% from $23 million to $54 million over the year as customer numbers jumped from 23,000 to 34,000 (Pulse CEO Dene Biddlecombe, who resigned on October 19, has told media that three years ago there were 400 customers).
The seven-man PowerKiwi exists in orbit around Powershop, but is a more satisfying story iin that it is independently-owned (shareholders include Lance Wiggs and Rowan Simpson), whereas Powershop is 100% owned by giant Merdian Energy, making it a well-performing business unit in one sense rather than a startup.
Mr Wiggs did not volunteer any financials, but did tell NBR PowerKiwi has a 22% share of the Powershop market - and that just under 50,000 buy power units through Powership.
More evidence that power is a hot sector: the aforementioned Freeman Media - whose flagship title is the (horrors, paywalled) Energy News - came in at number 42.
And one suspects that with the coming partial power company privatisations, this is going to continue to be a lively sector.
It's also interesting to see Nelson micro-brewer at McCashin's at number three. No doubt Geoff Ross and the guys behind Moa will take heart from that in the run up to the craft beer maker's IPO.
Overall, the Fast 50 is collectively making a very positive impact.
Deloitte says its members contributed $637 million to the NZ economy over the last three years and created 1376 jobs.