The 2013 Edition of the Branham300 marks the 20th Anniversary of the listing. The Branham300 is the definitive listing of Canada's top publicly traded and privately held Information and Communication Technology (ICT) companies, as ranked by revenues.
Canada's ICT industry continued to move forward in 2012, albeit at a modest pace, as cumulative revenues for the Top 250 Canadian ICT companies increased by 0.46% to $83 billion. Despite losses due to merger and acquisition activity, growth can be found throughout this year’s ranking, with 74.80% of listed companies experiencing revenue increases in 2012, and more than half (54.0%) of this year’s top tech players posting double-digit gains.
The 2013 Edition of the Branham300 consists of the following major listings:
The Branham300 also recognizes the leaders within each of the sectors of the Canadian ICT industry:
The list represents a snapshot of the companies surveyed at a specific point in time according to specific criteria. Where estimates were provided, these estimates have not been updated to reflect actual figures.
While Canada's ICT sector advanced only slightly in 2012, it did achieve a milestone in setting a new revenue record of $83B for the Top 250. While this represents only a modest 0.46% increase compared to 2011, this can be attributed to a number of mergers and acquisitions by US companies and a decline in revenues from BlackBerry (formerly Research in Motion). Despite these losses, growth can be found throughout this year's ranking, with 74.80% of listed companies experiencing revenue increases in 2012, and more than half (54.0%) of this year's top tech players posting double-digit gains.
Canada's number one ranked technology company, BlackBerry, played a key role in the modest inclines of the industry overall, posting a 7% decrease in revenues compared to 2011. The wireless pioneer accounts for 22.10% of the Top 250's total revenues, which had dramatic effects on the overall industry growth rate in 2012 and will again in 2013.
First and foremost, netting out RIM's revenues from the past two year's data shows that without Canada's leading wireless player, the industry experienced a 3.58% increase in 2012. While overall, the industry's growth was modest, this shows that the rest of the sector continues to do well. Given the recent release of BlackBerry's fiscal year 2013 results, this will also have a very dramatic effect on next years listing and perhaps may lead to a serious challenge for the top spot on the Top 250 from some of the major Canadian wireless and internet service providers.
The majority of Canada's major ICT sub-sectors also experienced growth in 2012. Leading the way with a 12.98% growth rate was the ICT Professional Services sector, followed by the xSP sector, which boosted annual sales by 7.93%. Due to a significant amount of Merger and Acquisition activity, the ICT Hardware and Infrastructure sector saw a 10.13% decrease compared to 2011.
Lastly, with the exception of Ontario, which was hit hardest by the M&A activity, Canada's other major technology-driven provinces (Quebec, British Columbia, and Alberta) that house the overwhelming majority of the country's top ICT companies, produced at least 6% growth in 2012. The success within each of these provinces, and the continued development of key technology hubs in the Atlantic and Mid-West regions, is critical to the long-term future of the Canadian ICT industry.
The geographic composition of Canada's Top 250 ICT companies remained fairly static in 2012, with 95.60% of companies being headquartered in Ontario, Quebec, B.C. or Alberta. These provinces also generated 97.79% of the Top 250's total revenues. Despite this, some of the country's most creative and leading-edge companies are located in places like Fredericton (Accreon), Saskatoon (EBM Office Systems, CollegeMobile) and Winnipeg (IMRIS), a testament that Canadian ICT companies do not have to be at the epicentre of the ICT industry to be considered at the forefront of tech innovation.
The ICT industry in Ontario saw the only decrease in overall revenues as compared to the others, dropping 3.88%, which is in stark contrast to the significant gains experienced a year earlier (16.30%). Quebec, B.C., and Alberta all had gains in 2012, which where consistent with those in 2011. This can be attributed to the impact of BlackBerry's seven percent decrease in year over year revenues; Ontario would have realized a very slight increase (0.18%) otherwise. The ICT industry in British Columbia saw the largest increase in revenues in 2012, rising 7.22% with Alberta and Quebec close behind with 6.28% and 6.22% respectively.
|Growth (%)||% of Top 250
The Top 250 consists of leading players from each of the Canadian ICT industry's four major sectors: Software, ICT Professional Services, ICT Hardware and Infrastructure, and x Service Providers (xSP). The Software and ICT Professional Services sectors combined to account for 67.60% of the companies listed on the Top 250 in 2012. Despite this significant share, the two sectors only account for 20.83% of the listings total revenues.
The ICT Professional Services space, led by CGI, realized the sharpest rise in revenues over the past year, relative to each of the other industry sectors, as cumulative revenues increased 12.98% from $10.87B in 2011 to $12.28B in 2012. The xSP sector followed with 7.93% growth, slightly higher than the 5.91% growth experienced in 2011. While the Software sector, led by OpenText, experienced modest gains in 2012 (0.31%), this is well behind the growth levels experienced in 2011 (16.92%), largely due to the continued acquisition activity seen across the industry.
The ICT Hardware and Infrastructure sector in Canada was the only major ICT sub-sector to experience a decline in 2012, dropping 10.13% compared to a 20.55% increase in 2011. The decline came largely as a result of Canada's top ICT Company, Blackberry, seeing a 7% decline in revenues for FY2012. As a result of the decline, Canada's ICT Hardware and Infrastructure sector now falls to the number 2 position, representing 38.01% of Top 250 revenues, as compared to the xSP sector, which now sits on top, representing 41.16% overall.
Some notable sub-sectors that have gained some traction in Canada over the last year include security, IT staffing, Digital Media, Software as a Service and Cloud, as well as Mobile. Canadian companies operating in these areas saw significant growth in 2012 with this expected to continue into 2013.
|Sector||2012 Revenues ($000)||2011 Revenues ($000)||Growth (%)||% of Top 250 Revenues|
|ICT Hardware and Infra.||$31,546,875||$35,103,994||-10.13%||38.01%|
|ICT Prof. Services||$12,279,752||$10,868,605||12.98%||14.79%|
The top ranking companies in each industry sector maintained their leadership status in 2012. While each sector boasts a number of players that are recognized worldwide for their innovative offerings, the following are the companies that currently champion the Canadian ICT industry.
There is no getting around the fact that 2012 was a difficult year for Canada's leading technology company. While BlackBerry posted a 7% decrease for its fiscal 2012, despite a better 4Q13 thanks to the recent release of its new phones and operating system, it posted a 40% decrease for its 2013 fiscal year. The company plans to increase its marketing investment in 2013 (2014 fiscal year) in support of the global launch of BlackBerry 10. The company is hopeful and expects to approach breakeven financial results in the first quarter of fiscal 2014 based on its lower cost base, more efficient supply chain, and improved hardware margins.
Canada's three largest national telecommunication players – BCE, Rogers Communications and TELUS – continued their reign on the Canadian wireless and internet space in 2012. BCE and Rogers Communications posted more modest gains, with each company increasing sales by an estimated 4% and 2% respectively in 2012, while TELUS again churned out an estimated 8% increase (compared to its 9% increase last year) in wireless and internet sales to $8.70B.
CGI Group continues to hold the top position (nine consecutive years) in the Professional Services category and continued its consolidation strategy acquiring United Kingdom-based computer services company Logica (completed in August 2012). With this acquisition, CGI Group holds a significant presence through the Americas, Europe and Asia, with a combined 72,000 professionals in 43 countries offering customers across the world a mix of business and technology expertise as well as a combination of local and global delivery options. During 2012, CGI Group posted $5.2 billion in bookings. Expect to see CGI continue to hold its top position for some time to come.
In 2011, Open Text surpassed the $1B mark in annual sales for the first time in company history. In 2012, the company further increased revenues by 17% compared to the previous year. The enterprise content management leader continued its strategy of pursuing acquisitions in order to fuel expansion. The company made three acquisitions in fiscal 2012 including System Solutions, Operitel Corporation, and Global 360 Holding. The recent acquisition (fiscal 2013) of Easylink has positioned OpenText in the ever present cloud market, providing it with a fundamental building block and a data centre presence in 25 countries for software as a service and managed hosting. With more than 50% of its sales coming from recurring revenue sources, it is likely that the company will continue to build on its recent successes going forward.
The companies comprising this year's Foreign ICT multinationals put together an impressive campaign, with an average overall growth rate of 5.0%, as compared to the industry average of 0.46% for the Top 250. All of these players are world-renowned technology firms, and have chosen to set-up significant operations in Canada, a true testament to the skill and technical ability of Canada's workforce. While these companies were not founded and are not headquartered within Canada, there is no questioning the role that they play in developing and supporting Canada's ICT industry.
IBM Canada again tops this year's listing of the Top 25 ICT Multinationals with operations in Canada, generating an estimated $5.94B in 2012, a 1.37% increase compared to 2011 figures. The global IT product and services provider made headlines in late-2011 when it announced the take-over of Platform Computing for an undisclosed sum in October, and the subsequent acquisition of Varicent in April 2012, a provider of compensation and sales performance management software solutions. With its long track-record of acquiring top Canadian technology companies, expect IBM to continue to look north of the border to bolster its innovative technology portfolio.
HP Canada maintained its position as the second largest foreign ICT multinational in Canada despite its five percent decrease in revenues to an estimated $4.30B, while third place Cisco Systems Canada boosted sales by 10% year-over-year to $1.77B. Rounding out the top 5 are Microsoft Canada and Oracle Canada, which jumped 2 spots to push down Xerox. With the exception of HP Canada, the other four companies posted year-over-year increases.
Several former Branham300 Up and Comers such as GoInstant, Rypple, and Summify were acquired, while many other rising technology stars closed prominent funding rounds in order to fuel their next major growth milestone. While Canada has long been known as a hot-bed for innovative start-up activity, it seems that more recently, the world's most prominent technology brands have begun to take further notice, with companies such as Zynga, Twitter, Salesforce.com, Google, Groupon and many others, adding top Canadian start-up talent to their technology arsenal over the course of 2012.
This year's group of Top 25 ICT Up and Comers represent the next crop of innovative Canadian technology companies that are on the leading edge. Headquartered from coast-to-coast, these companies are pushing the limits in existing markets such as healthcare, big data analytics, and cloud solutions and paving the way in new areas such as online scheduling, real-time decision support, and interactive gesture sensing. Look for these companies to continue to make some noise in 2013 and beyond.
The Canadian x Service provider (xSP) category is comprised of application, managed, wireless and Internet service provider companies. Traditionally, the xSP category has accounted for a small percentage of Top 250 companies relative to each of the other major categories (Software, ICT Hardware and Infrastructure and ICT Professional Services), but has contributed a significant percentage of the Top 250's total revenues. This trend continued in 2012, as the 31 listed xSP companies (12.40% of Top 250 companies) combined to generate $34.16B in revenues (41.16% of Top 250 revenues), a 7.93% increase compared to 2011. The leading players within the xSP market generate the overwhelming share of the sector's revenues, as the Top 10 xSP companies on this year's Top 250 produced a combined $33.47B in sales in 2012 (98% of the category's total revenues).
With each company boasting combined wireless and internet subscriber bases of at least 8.5 million, BCE, Rogers Communications and TELUS maintained their Big Three status in 2012. Both BCE and Rogers realized low single-digit gains in annual revenues, and while BCE maintained its number 1 rank, TELUS revenues increased 7.75% to knock Rogers out of second position. Videotron and Cogeco Cable beat out those in the Top 10 xSP companies in terms of growth, increasing revenues by 18.32% and 13.83%, to $959M and $412M in 2012, respectively.
Thanks to last years media coverage of the collisions over the push towards usage based billing practices between big telco's and independent Internet service providers, a wider population has been made aware of alternatives to the big three. This is best illustrated by TekSavvy (currently beyond the Top 10), which saw a significant increase in revenues posting year-over-year increases of 64%; the previous year saw revenue increases in excess of 45%.
The Canadian Software sector saw some impressive growth in 2012 despite the modest 0.31% increase year-over-year to $5.0B. Focusing on the top 25, there was a growth of 3.78% year-over-year despite the fact that some significant brands were acquired; Algorithmics, MKS, and EISI. Netting out these acquisitions, the Top 25 Software vendors saw a year-over-year increase of 12.87%
Solidifying its status as Canada's largest independent software company, Open Text increased sales by 16.86% from $1.03B in 2011 to $1.21B in 2012. During its 2012 fiscal year, the Waterloo, Ont.-based company realized positive growth across each of its product segments and across all its major geographic markets. Given the enterprise content management market's stable operating conditions, and Open Text's diversified and growing customer base (organic and through acquisition), it is expected that Canada's top software company is poised for continued growth into the foreseeable future.
Constellation Software's buy-and-build strategy continued to churn-out double-digit growth in 2012, as total revenues for the Toronto-based company climbed 15.24% to $886.7M. In 2012 alone, the company completed thirty-five acquisitions for an aggregate cash consideration of $141 million. Over the past few years, the company has finalized between 10-20 acquisitions annually, contributing significantly to its current position as Canada's second largest software player. Mitel continues to hold the third position, increasing revenues 3.82% in 2012 to $609 million.
Beyond the top three players, several other companies produced impressive growth last year. Leading this group was Quebec-based Amaya Gaming Group, which boosted revenues by over 300% to $75.2M, thanks to acquisitions that help solidify its position in the online gambling industry. Other companies that realized notable revenue increases in 2012 again include PointClickCare (33.56%) with the next closest being iQmetrix (18.11%) and Computer Modeling Group (17.76%).
Throughout the end of 2011 and into 2012, IBM continued to set its sights on Canada's top software players. In addition to its acquisition of the previously fourth ranked Algorithmics Inc. in September of 2011, and the cluster, grid and cloud management software specialist Platform Computing in October of 2011, the IT products and services multinational acquired Varicent, a provider of compensation and sales performance management software solutions in April of 2012. Big Blue has a long history of acquiring top tier Canadian software companies – Clarity Systems (2010), Cognos (2008) and DataMirror (2007) – in order to drive growth and bolster its product portfolios in specific vertical markets.
The ICT Hardware and Infrastructure sector once again saw some struggles in 2012. While the Top 25 saw a decrease of 9.17%, all tracked Hardware and Infrastructure companies saw a decrease of over ten percent; in part due to BlackBerry's posted 7% decrease and a number of acquisitions.
BlackBerry continues to be Canada's most prominent technology company and has a lot on the line with the recent release of its new Z10 and Q10 phones and its new operating system. While the company has already posted its fiscal 2013 results with a significant 40% decrease in year-over-year revenues, the company's 4Q13 was better than previous quarters illustrating some traction with these new devices. While this will have a significant negative impact on next years listing, the company hopes to gain more traction into 2014.
Celestica and CAE again maintained their positions in the top three for 2012. While Celestica saw a drop in revenues of almost 10%, CAE saw an increase of almost 12% to $1.82B; the only increase amongst the Top 5 ICT Hardware and Infrastructure companies in Canada. Calgary's SMART Technologies and Aastra Technologies saw decreases of 5.61% and 12.46% respectively.
Much like the software sector, the ICT Hardware and Infrastructure sector continues to see an uptake in interest from foreign multinationals in acquiring top Canadian players. Those notably absent from this year's Top 25 ICT Hardware and Infrastructure companies listing include: Gennum, acquired by Semtech; March Networks, acquired by Infinova; Miranda, acquired by Belden Inc.; MOSAID Technologies, acquired by Sterlink Partners; and Zarlink, acquired by Microsemi Corporation. Taking these acquisitions into consideration, and netting them out, the decline in ICT Hardware and Infrastructure segment is reduced to 5.99%. Additionally netting out BlackBerry, the decline in revenues of the Top 25 is reduced to 3.53%. RuggedCom was also picked up by Siemens in 2012 making this the last year it will appear on the Branham300.
Compared to each of the other major sectors that comprise the Canadian ICT industry, the ICT Professional Services sector saw the best performance with respect to increased revenue year-over-year. The 83 sector companies landing on this year's Top 250 combined to produce $12.3B, up 12.98% from $10.9B in 2011. The Top 25 posted an increase of 15.39%.
For the ninth consecutive year, CGI Group headlines Canada's Top 25 ICT Professional Services companies listing; solidified by its acquisition of Logica and its 12.99% increase in year over year revenue to $4.77B in 2012. The company has a long-standing strategy of pursuing deals that complement core offerings and expand its geographical footprint. Look for CGI Group to continue to act as a consolidator in the near-term.
While Softchoice and MacDonald, Dettwiler and Associates continue to hold their positions in the top 3, with increases of 6.63% and 15.06% respectively, OnX Enterprise Solutions jumped four positions to take the fourth spot with a 201.6% increase in revenues, knocking Procom Consultants Group down to the fifth position despite a 19.11% year-over-year increase to $696.99M. OnX Enterprise Solutions' significant increase in revenues can be attributed to its acquisition of the Agilysys Technology Solutions Group, making it one of the world's largest independent multi-vendor enterprise data center solutions providers.
Throughout the Top 25 ICT Professional Services companies, only a single company posted a decrease in revenues. Hartco was negatively impacted by impairment charges of $9.7 million, including $4.9 million pertaining to an internal business transformation project and $4.8 million pertaining to Hartco's investment in ScreenScape. In addition to OnX Enterprise Solutions' significant increase, The Herjavec Group, Illumiti, R3D Consulting, and Scalar Decisions saw year-over-year increases over 40%; 64.67%, 52.36%, 45.10%, and 42.67% respectively.
While growth can be found throughout this year's Branham300, several Canadian ICT companies surged ahead of the pack in 2012. The companies landing on this year's Top 20 Movers & Shakers listing ascended a combined 1083 positions on this year's Branham300, while the industry's Top 10 Growth companies produced an average year-over-year increase in revenues of 147.27%. There is no denying this fact: the Canadian ICT industry is home to some of the fastest growing companies in Canada.
Toronto, Ontario-based Symbility Solutions (formerly Automated Benefits) led all listed companies this year, rising 91 spots from the 235th position in 2011 to the 144th spot in 2011. Founded in 1999, the company provides the insurance industry with a platform for cloud-based claims processing and estimating technology to optimize claims performance for Property & Casualty insurance, which has gained in popularity with the industry movement to both cloud computing and mobile interaction.
An only slightly second to Symbility Solutions, is Pointe-Claire, Que.-based Amaya Gaming Group, which this year raised 89 positions from the 150th position to this year's 61st position. This is in addition to last year's top mover when it moved up 107 spots from the 257th position in 2010 to the 150th spot in 2011. The still young technology-based gaming solutions developer, which was founded in 2004, generated an estimated $75.2M in sales in 2012, up 309.47% from $18.4M in 2011. This also puts the company second in the top 10 growth companies for 2012. Much of the company's continued growth can be attributed to its acquisition of fellow-Canadian Chartwell Technologies, which it completed in July 2011, in addition to several large software licensing contracts in Europe and the Caribbean. It is expected that Amaya Gaming Group will continue to ascend up the ranks in future years, although at a slower pace as it ascends to its place amongst some of the larger vendors on the listing.
Topping the list of the Top 10 Growth companies is SecureKey Technologies with a 365% increase in year over year revenues to $9.3M. This young Toronto-based company provides an innovative platform-as-a-service for authentication, payment and identity, which Intel is incorporating in the ID protection built into Ultrabooks, allowing online shoppers to tap their credit card against their computer to be authenticated instantly. SecureKey was also listed as an Up and Coming ICT Company in last years 2012 Edition of the Branham300. In addition to the already mentioned Amaya Gaming Group in 2nd position, OnX Enterprise Solutions provided the third largest year over year growth of 202%, and is the highest growth company on the 250 list, positioned at 17th. Rounding out those that saw an increase of over 100% include Tangentia at 169%, growing to $7M in 2012; BNOTIONS at 115%, growing to $4.8M; and the aforementioned Symbility Solutions at 108%.
Several existing ICT industry trends continued to evolve over the past year, while market conditions prompted a few net-new ones to emerge in 2012. The following provides a high-level snapshot of what to look out for in Canada's ICT industry in 2013.
As is often the case, Canadian companies seem ripe for the picking. Whether the intention is to break into or strengthen their position in the relatively stable Canadian market, or to acquire great Canadian talent, or that Canadian companies are considered relatively cheap compared to their US counter parts, foreign players continue to pick up leading Canadian technology companies. At the end of 2011 and throughout 2012, Canada's tech industry lost several leading brands that are now under foreign ownership. Companies like Zarlink Semiconductor, Miranda Technologies, MKS, Algorithmics, Gennum, March Networks, RuggedCom, MOSAID, EISI, Adeptron, and more have all been acquired by foreign entities and are no longer listed on the Branham300.
2012 was touted as a year for Big Data, and this was exemplified by Canadian start-ups and product releases. While a number of traditional analytics vendors have manipulated their marketing, claiming to play in this space, few have solutions that are dedicated to truly addressing unstructured data in its original format. Ottawa-based Scalable Analytics, on the Branham300 Up and Comers list, provides solutions for real-time analytics of streaming data before it is stored. OpenText, in combination with its acquired semantic analytics (Nstein), released its InfoFusion product that aims to provide analytics for unstructured content stored in distributed enterprise content management systems, allowing organizations to discover knowledge they might otherwise ignore. Big Data is an area that will continue to develop and gain further attention in 2013 and onwards.
Cloud computing continues to provide organizations with a reduction in the costs that are associated to delivering solutions to both employees and customers. While the movement towards Cloud computing is not new, companies continue to develop solutions that are delivered through the cloud. The number one positioned software vendor OpenText, acquired EasyLink providing it with the fundamental building blocks and data center presence it needed to deliver its solutions through a Cloud and SaaS model.
Further, the increased adoption of Smart Devices by mobile workforces is helping drive the use of Cloud and Software as a Service solutions allowing them to more easily interact with these offerings and socially with colleagues. For example, the recently released “Tempo” from OpenText provides an enterprise equivalent to Dropbox that caters to the mobile workforce, allowing them to share and collaborate on documents stored in a corporate enterprise content management system without a requirement to first download, attach, and send the document.
The increasing trend toward mobile and smartphone devices continues to stimulate the formation of new mobile application developers, or pushes existing solutions to create dedicated mobile applications. For example, a number of Movers and Shakers on the Branham300 that have offered cloud related services for some time, have released mobile applications for interacting with their services beyond simply accessing the web based interface through a smart device. The increases in bring your own device policies have also forced organizations to implement new measures to combat new security threats, increasing revenues for specialists. Four of the Top 10 growth companies on this years listing are dedicated to providing security and authentication based solutions and services. And finally, the Digital Media and Entertainment industry has also seen a significant increase in the number of developers of mobile solutions (and related revenues), some of which have made it on this year's Up and Comers list. Further, 25% of this year's Top 20 Movers and Shakers also provide Digital and Mobile solutions.
The Canadian ICT industry continued to move forward at a steady pace in 2012 and this is expected to continue well into 2013. Growth can be found throughout this year's Branham300, with companies ranging in size from $5-$10M all the way to $1B+ experiencing improved market conditions compared to previous years. While Canada's top technology player, BlackBerry, must continue to execute and deliver with its new line of smart phones, the rest of the ICT contingent in Canada possesses the requisite talent and level of innovation needed to drive the technology industry forward for years to come. Canada is recognized as a world leader when it comes to this knowledge based tech industry and continues to demonstrate this time and time again, with the new crop of companies that continue to work their way up the ranks and as others move on.
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The 2013 Edition of Branham's annual report – Canada's ICT Industry: A National Perspective – will be available soon. The report provides in-depth analysis of Canada's leading ICT companies based on Branham300 aggregate data that has been collected during the past three years. It includes over 90 figures and 15 tables, as it provides comprehensive intelligence on key industry metrics (revenue, revenue growth, revenue per employee, research & development investment, general & administrative costs, sales & marketing expenses, national and international revenue sources) along with extensive discussion on the happenings within the Canadian ICT industry during the past three years. To learn more about this year's report, receive a copy or learn more about its contents, please contact us.