ICT Report

2015 Branham300 – Canada’s Top Tech Companies

The 2015 Edition of the Branham300 marks the 22nd year of the listing—and another year in which Canada’s Information and Communication Technology (ICT) sector set a revenue record.

The Branham300 is the definitive listing of Canada’s top public and private ICT companies, as ranked by revenues.

Canada’s Top 250 ICT companies delivered another banner year in 2014.

2013: $85 billion, an increase of 2.4%.
2014: $90.9 billion, an increase of 6.8%.

That is a remarkable total, especially considering that revenues at BlackBerry, the former king of Canada’s ICT sector, dropped 38% to $7.7 billion in fiscal 2014.  


Branham300 analysis, by Wayne Gudbranson

Issue #4 of The Branham Report will deliver Wayne's analysis and opinion of the 2015 Branham300 results. Sign up here to have issue #4 sent to you for free.

The 2015 Edition of the Branham300 consists of the following major listings:

The Branham300 also recognizes leaders within industry sectors:

The list represents a snapshot of the companies surveyed, taken at their fiscal year end of the calendar year before the list is published. Eligibility is based on specific criteria. Where estimates were provided, these estimates have not been updated to reflect actual figures.

Canada’s ICT Industry: A Year of Growth

The ICT sector in Canada continues to impress. For the fifth consecutive year, the Top 250 recorded growth and set record revenues.

Revenue total: $90.9 billion.

Year over year: 6.8% growth, a big step up from last year’s 2.4%.

Growth: 73% of Top 250 companies grew their revenue.

Double-digit growth: 52% of Top 250 companies hit double-digit growth.

A new #1

BlackBerry held the top spot on the Top 250 for five years, but in 2014 that winning streak came to an end. BlackBerry was replaced by the industry’s new champion: BCE.

BCE 2014 revenue (wireless and Internet only): $12.23 billion.

Growth: 5%, compared to 2013 revenue of $11.67 billion.

BCE operates in an established wireless and Internet telecom business while competing against established rivals selling essentially the same products and services, so growth of 5% is an impressive achievement. This is especially true when considering that, in the same business segments, second-place Rogers’ revenue stayed flat.

The BlackBerry effect

The losses suffered by BlackBerry actually leached some strength from the industry’s overall growth.

Top 250 revenue growth: 6.8%.

BlackBerry’s fiscal 2014: $7.7 billion, a drop of 38%.

Top 250 revenue growth with BlackBerry netted out: 13.4%.

2014 was yet another tough year for BlackBerry. The 2014 revenue drop of 38% is not quite as bad as the decline of 40% the company suffered in the fiscal year prior. And good news may be on the horizon, as the company completes its restructuring drive and shifts focus away from hardware and on to software and security, principally for the enterprise.



Results by region

The majority of Canada’s ICT activity takes place in four provinces:

Alberta: 24 companies
Quebec: 33 companies
British Columbia: 40 companies
Ontario: 144 companies

These four provinces represent 96.5% of the Top 250 companies, and 98% of total revenues.

Biggest growth: Quebec once again grew the most, at almost 15%. The province’s top five companies increased their topline, with Amaya Gaming Group coming in with a province-leading growth rate of 372%.

Ontario: the province reversed last year’s 12% decline, instead growing this year by 1.77%.

The province was pulled down by the continuing problems at BlackBerry but helped by impressive performances by:

Constellation Software (38% growth)
Mitel (94% growth)
Redknee Solutions (81% growth)

 


Sector Performance

The Top 250 is divided into the industry’s four major sectors:

Software: the big story, scoring a country-leading growth rate of 63.65%. That compares to 20% the year prior.

Constellation Software is a significant chapter of that story, growing by an impressive 38%. Rounding out the Software top three was Open Text with 19% growth and Mitel at 94%.

X Service Providers: coming in second in the race for growth, xSPs scored an increase of 13.17%.

xSPs: these companies hold three of the top five slots of the Top 250.

BCE again led the sector, reaching revenue of $12.2 billion on 5% growth.

ICT Professional Service: the sector saw little change, with only 1% overall growth.

CGI was again the flagship for overall services revenue, with 4% growth to $10.5 billion.

Of the top five, MDA and Procom impressed with 15% and 20% growth respectively.

ICT Hardware and Infrastructure: the only sector to see a revenue decline, Hardware and Infrastructure took an 11.18% hit, primarily due to the falling fortunes of BlackBerry.

16 of the sector’s 47 companies, or 34%, saw a decline in revenue.


Top Performers

Last year the top players in the major categories remained unchanged, but this year saw more volatility. Although three of the four remained in place, they are facing tougher challengers.

BlackBerry: The company is still on top of the Hardware list, but its lead is shrinking fast. Partly, this is because its focus on hardware is lessening. In fiscal 2013, it was ahead of Celestica by $5.43 billion. In 2014, that advantage was down to $1.34 billion. Even though Celestica’s revenue declined by 3% year-over-year, we expect it to take the top hardware spot in fiscal 2015.

BCE: BCE kept its grip on the xSP crown, and its growth was impressive. In the mature and relatively stable Internet and wireless business, BCE managed to grow by 5%. However, Telus’ 8% growth is moving it closer to the leader, and it now sits only $2.12 billion out of the first-place spot. Rogers is making an aggressive multi-screen play with its NHL deal and came in second on overall revenue, but its growth is stuck at 0%.  

CGI Group: CGI sits atop the ICT Professional Services category for the 11th year, and with an $8.4 billion lead over MDA in second place we expect CGI to hold on to first for the foreseeable future. When president and CEO Michael Roach said in November 2014 “…we begin fiscal 2015 in an excellent position strategically, operationally and financially” he was not exaggerating.

On the main Top 250, BCE’s strong performance put it $1.6 billion in front of CGI, but CGI is only $660,000 behind second-place Rogers.

Constellation Software: The smallest of margins allowed Constellation Software to take over top-spot on the Software list from former champ Open Text. In 2014, Constellation Software won by only $50,649,000. But the race has been close for a while: in 2013, Open Text was in first by only $128,852,000.


Top 25 ICT Multinationals

In 2013 the IT Multinationals category experienced a 0.3% decrease in revenues generated within Canada. One year later, the group had turned that around, achieving 6% growth compared to 2013.

The top two multinationals—IBM and HP—each suffered revenue declines of 5% in Canada.

The next five companies on the list compensated for this with increases ranging from 2% to 22%.

Nokia exited the list, after being purchased by Microsoft in April of 2014. DST Systems also dropped off the list.

Newcomers include Teledyne Technologies—contributing $261 billion—and Hitachi at $325 billion.

Companies in this sector tend to be stable performers, rarely moving significantly up or down the list. Exceptions to this include General Dynamics, up four points, and CDW and CA, which each climbed three positions.

The figures on this list are Branham estimates, based on the company’s understanding of the market and of trends in the industry. Multinationals almost never delineate revenue specific to Canada.


Top 25 ICT Up and Comers

Canada continues to produce world-class start-up companies. The Top 25 Up and Comers is the only Branham list that is not based on revenue. Rather, this is Branham’s chance to recognize bright young companies that are just at the beginning of their growth.

As always when looking at geographic concentration, Ontario holds the lion’s share of companies.

44% of Up and Comers came from Ontario in 2013. This grew to 60% in 2014.

Also gaining in 2014 was Nova Scotia, going from 8% to 24%.

These companies haven’t earned appreciable revenue yet, but give them a year or two and then look for them on the Top 250.


Top 10 xSP Companies

The x Service category (comprised of application, managed, wireless and Internet service providers) is a fascinating one:

It contains relatively few companies. At 22 in total, it has less than half the number of the next smallest category, Hardware, at 47 companies.

It contributes an outsized share of the Top 250: the combined revenue of BCE, Rogers, Telus and Shaw Communications represents 40% of the total Top 250 revenue.

Overall, the category generated 44.2% of the Top 250 revenue. This is up from 41.7% in 2013.

This is despite a drop in total xSP companies on the Top 250: 32 in 2013, 22 in 2014.

It seems any concerns that the recently mandated two-year cellular contracts would harm the industry have proven unfounded. If anything, large xSP companies continue to be the powerhouses of the Canadian ICT sector.


Top 25 Software Companies

The Software sector took a big leap ahead in 2014: total revenues for the Top 25 were $8.98 billion.

That’s a 72.7% increase over the $5.2 billion total in 2013.

11 out of the 25 companies generated revenue growth greater than 25%.

Amaya Gaming Group posted amazing growth of 372%.

Constellation Software, the sector leader, grew its revenue by 38%.

Just behind was Open Text, scoring an impressive 19% growth.

Rounding out the top five were Mitel with 94% growth, D+H at 34% and Amaya.


Top 25 ICT Hardware and Infrastructure Companies

The Top 25 Hardware list shared the same weak performance as did the sector overall. Of the top five companies, only three grew their revenues and even then the growth was only 2% (OnX), 3% (Telesat) and 4% (CAE). On the loss side, first-place finisher BlackBerry had a revenue drop of 38% and Celestica was down 3%. Eight of the Top 25 had growth of 0% or worse.

There was some good news on the list:

Avigilon impressed with 52% growth.

Novadaq scored 33% growth.

Revenue at Stoneworks Technologies improved 30%.

12% of Top 25 Hardware companies posted double-digit gains.

Still, the performance of the overall Top 25 dipped slightly, falling from total revenue of $24.8 billion in 2013 to $22.02 billion in 2014, a loss of 11.2%.

Much of this decline, of course, lies at the feet of BlackBerry. The company shed $4.84 billion in fiscal 2014, pulling the entire sector down year-over-year.


Top 25 ICT Professional Services Companies

The ICT Professional Services sector delivered solid performance, increasing 5.2% from $17.4 billion in 2013 to $18.3 billion in 2014.

CGI: far and away the leader of the sector, CGI’s $10.5 billion in revenue was five times greater than MDA, in the second spot with $2.1 billion.

Even moderate growth of 4% helped CGI drive the overall sector’s performance.

Tundra Technical Solutions, a newcomer to this list, delivered an impressive growth rate of 82%.

Klick, in second in the growth race, came in with a 31% gain, with Distech Controls and VERITAAQ tied for third with 30% each.

64% of companies on the list achieved growth, with 52% hitting double-digit growth.

Stable sector: overall, seven of the Top 25 maintained their 2013 standings.


Top 25 Movers & Shakers and Top 15 Growth Companies

While 2014 was a growth period for the industry overall, some companies really stood out. The Movers and Shakers list recognizes the companies which climbed the most spots over the year.

2014 Top 25 Movers and Shakers climbed a combined 947 spots.

Addictive Mobility was the fastest riser, climbing 59 spots to #178 on the Top 250.

Directly behind was Smart Employees Benefits (up 58 spots), Intrinsyc Software (up 46 spots) and Magnet Forensics (43).

Revenues at the Top 25 Movers and Shaker companies was also impressive, with a combined total of $325.4 million. Revenue for the same 25 companies in 2013 was $222.9 million.

Growth slowed significantly, however, among the Top 15 Growth companies.

2013 saw average revenue growth of 686.7%. In 2014, the category achieved an average of 145.2% growth.

The 2013 list was dominated by massive growth at SEB and Toocoo Media. In 2014, both companies posted impressive, but not meteoric, growth.

Amaya Gaming Group was the top of the 2014 Growth list, with a 372% increase.

Big Blue Bubble was close behind, with 319%, followed by ThoughtWire, Secure Sense Solutions and Powered by Search at 238%, 185% and 150% respectively.


2014 in Review

The good news is that the ICT industry in Canada once again achieved year-over-year growth, and set a revenue record.

The great news is the sheer size of that revenue: $90.9 billion is a remarkable number. In a year in which former-star BlackBerry struggled, it would not have been surprising if the sector took a hit.

Instead, Canada’s other ICT players stepped up. Established firms including Constellation Software, Open Text, Mitel, Klick, BCE, Telus and D+H all delivered impressive growth rates, while newer companies like Amaya, Big Blue Bubble and ThoughtWire (none more than about a decade old) led the Growth chart with increases of more than 200%.

This depth in Canada’s ICT community is very important. The economy is an increasingly global one, and countries will not be judged by the strength of traditional industries but by the innovation of their ITC sectors. In that environment, seeing growth in this country’s ICT sector every year since 2009 is a good sign.

2014 was also the year when first place changed hands, and it set the stage for more volatility at the top of the charts. This is the first year since 2009 that BlackBerry (then known as RIM) has not been the number one company on the Top 250. Replaced by BCE, BlackBerry moved to fifth place.

But it is possible that BCE will not stay at the top for as many years as did BlackBerry. It is ahead of Rogers by only $1.46 billion. Third-place CGI is $1.7 billion off the mark, but it grew by 4%, meaning it could soon challenge BCE.

On the Software list, Constellation Software and Open Text swapped places this year but, with only $50.6 million separating the players, the two could easily flip places again next year. Other close races include the xSP, Pure-play Health and Security sub-sectors, and any of those could see a change in first place next year.

Putting aside the specific changes and the battles for rank that will take place over 2015, what emerges is a sector that is strong and deep, and continues to set revenue records.

Total revenue of $90.9 billion is remarkable, and the 250 Canadian ICT companies which achieved that record earned the right to be proud.

2015 Branham300 Sponsors



National Premier Sponsor


Waterloo Innovation Network




National Corporate Sponsor

EY




Event-Level Sponsors

Ottawa, Toronto, Waterloo

Cowan Insurance Brokers


Additional Toronto Event Sponsors

Cassels Brock Lawyers

TechConnex




Interested in sponsoring next year's listing? Please contact us for more information.