Every year, Deloitte & Touche's “Technology Fast 50” ranking tracks the progress of the industry by showcasing the 50 fastest-growing tech firms in the country.
Duncan Stewart, Deloitte's head of research in the technology, media and telecom fields, joined us to explain which technologies are on the rise and what the future holds for the industry.
Mr. Stewart, a CFA, has almost two decades of experience in the industry. As an analyst and portfolio manager, he has provided research or made investments in the entire Canadian technology and telecom sector. He has written research on names such as Nortel and Celestica, and been a venture capital investor in Research in Motion.
Duncan is also a founder of Tera Capital, Canada's first high-tech and biotech money manager. In the mid-1990s he managed a $150-million, small-cap high tech/biotech fund at a large Canadian pension fund manager.
Dave Michaels, globeandmail.com: Hi Duncan. Thanks for taking time from your schedule to join us today. The word on everyone’s lips these days seems to be “recovery,” from what has proven to be a steep economic downturn. How is Canada’s tech sector faring?
Duncan Stewart: Before we get to the heart of your question, there are a couple of important points to note:
1. There used to be a belief that technology was immune to economic cycles. In a recession, their growth might slow, but the industry as a whole would still do okay and be positive. But 2008/2009 showed us that ain’t true any more! In fact, some tech companies saw their revenues and profits fall further and faster than car companies or U.S. banks!
2. But just because the industry as a whole is down in a recession doesn’t mean that every company is affected. As today’s release of the Deloitte Technology Fast 50 highlights, there are some great pockets of growth in Canadian technology. Our winning company saw five-year revenue growth of more than 18,000 per cent, and even the “average” growth rate for all 50 companies was almost 2,000 per cent. There is a quote in this recession that “flat is the new up.” I guess our Fast 50 winners are setting their sights just a bit higher that that ...
If we move beyond the Fast 50 for a second, the broader Canadian tech industry is participating in the recovery in two ways. Stock prices are hugely up from the March lows (more than 60 per cent on average) and they are also seeing revenues and profitability coming back. Companies are raising guidance on both the top and bottom lines – sometimes materially. Fast 50 winner Dragonwave (No. 17 this year) has had to raise its guidance twice in the last few months, and the stock is at all-time highs, raising more money and listing on the NASDAQ. Sounds like a recovery to me ...
But not everyone is benefiting equally. Obviously companies like Nortel aren’t being helped, and some tech companies are in niches where the recovery looks like it will take longer.
Dave Michaels, globeandmail.com: Is there any one company that has done particularly well this past year?
Duncan Stewart: There are two that jump to mind.
Obviously, the company that was the No. 1 grower over the last five years, the Leadership Award winner for Emerging Technologies and a Green 15 winner, did pretty well! I have followed ProSep of Montreal for a few years now. The revenue success they have had confirms the trends that we have been seeing, and that led to our creating the Green 15 award for Canada’s top clean-tech companies back in 2007. More and more, clean technology is becoming the “next big thing” in technology. It isn’t just about saving the planet – being able to do more with less is both the right thing to do and something that makes a lot of money if done right. ProSep is a company that lies at the intersection of two Canadian industries: it uses technology to help the oil and gas industry. That nexus is a sweet spot for Canada and the planet.
