This year’s CRN Fast50 turned over a combined $863.6 million in revenue, considerably higher than last year’s group and the second highest revenue in the awards’ history. The companies this year grew sales a staggering total of $304.1 million, year on year.
The average growth rate was up on last year, too. This year’s CRN Fast50 grew at a blistering 75.87 percent average. This year’s No.1, The Missing Link Security, grew faster than last year’s winner. Likewise, this year’s No.50, BigAir Group, was faster than the 50th in 2015. The lowest growth rate to secure a place in the 2016 CRN Fast50 was 27.28 percent, a new record.
What was particularly impressive about this supersonic growth is that in 2016, for the first time, entry to the competition required a minimum revenue of $2 million. That’s a million dollars more than last year, and a big step up from the early days of the competition, when companies only required annual revenue of $250,000 to qualify.
Make no mistake, this year’s batch are major players in the Australian economy, employing around 4500 staff combined and doing serious business in the IT sector.
As always, there was a diverse mix of company ages, sizes and specialities across the list. Sydney is widely accepted as Australia’s tech epicenter, yet last year New South Wales was beaten by Victoria in terms of the state with the most CRN Fast50 companies. NSW is back on top this year, fielding 22 businesses. This was followed by Victoria with 12, Queensland with eight, South Australia with four and the ACT and Western Australian on two apiece.
The No.1 crown also returns to Sydney after five years. The last NSW-headquartered company to take the top spot in the CRN Fast50 was Anittel, which achieved its growth through a concerted acquisition strategy. This year’s No.1, The Missing Link Security, achieved pole position through almost opposite means, established in 2013 as a standalone company by a pair of former Dimension Data executives in partnership with directors from well-known Sydney IT provider, The Missing Link Network Integration.
Victorian companies placed a close second, both in terms of entrants and revenue. Victorian revenue was $278.7 million, versus $320.7 million from NSW. Big Melbourne contributors were publicly listed RXP Services (No.20), which is headquartered in Melbourne and turned over $127.1 million, as well as $38.2 million Revolution IT (No.44) and former No.1 NGage Technology Group (No.10), which turned over $27.7 million.
Despite only fielding two companies this year, Western Australia was a huge contributor thanks to the largest company this year, $179.8 million-turnover Kinetic IT (No.26). As the firm with the highest revenue in the CRN Fast50, Kinetic IT wins this year’s Leader Award.
To be eligible for the CRN Fast50, a company needs to have operated for more than two years. While there were a couple of youngsters – Warehouse1 (No.11) and Strut Digital (No.21) – some 20 of the companies have been in business for a decade. The oldest is Sydney-based Nortec IT (No.34), which returns to the CRN Fast50 after last appearing back in 2012.
More than 200 companies have now appeared in the CRN Fast50 over the eight years of the competition. As always, this year was a mix of first-timers and repeat performers – in fact, the list was split neatly down the middle. As one might expect, the first-timers grew faster but represented a smaller overall percentage of revenue, while the repeat performers didn’t quite grow as fast but represented a bigger slice of the pie.
The Australian IT company with the greatest number of appearances is once again Melbourne-based Blue Apache (No.35), which has secured a ranking in all eight years of the awards, the only company to achieve this feat of consistent performance.
Several other companies in the 2016 CRN Fast50 are part of our All Star club, which recognises businesses to have appeared in the awards at least five times.
Canberra-based Red 29 (No.46) is our newest entrant to this elite group thanks to slow and steady growth over the years. Red 29 first appeared in 2011, when it turned over $1.6 million, and this year it reported revenue of $4.2 million.
This year also marks a return to the list for Commulynx (No.27), which achieved All Star status back in 2014, and now notches up a sixth year in the CRN Fast50.
Revenue mix
Every year, we ask the entrants to the CRN Fast50 to tell us how much revenue came from hardware, software and services. In a U-turn from previous years, the percentage of revenue from services actually decreased in 2016, after what seemed an inexorable move away from product sales. Services represented 56.48 percent of this year’s total turnover, or $487.7 million (last year, services made up more than 70 percent of revenue).
Hardware revenues were worth $223.7 million (25.9 percent) and software generated $152.2 million (17.6 percent). Hardware-led companies grew faster than businesses that were services-dominant, perhaps not surprising given that IT products typically driver higher upfront revenue and hence generate chunkier sales.
In fact, the eight companies that generated the greatest sales from hardware (Warehouse1, Touchpoint Technology, Onel Consulting, BEarena, Correct Communications, NGage Technology Group, EFEX Group and Katana1) were all in the top 20 fastest-growing companies.
On the flipside, of the 10 companies that generated the greatest proportion of revenues from services (Outware Mobile, Bulletproof Group, 4mation Technologies, Best Technology Services, VentraIP Australia, Araza, Strut Digital, RXP Services, Kinetic IT, Neptune Managed Services), only three were within the top 20.
It would be fascinating to see how these companies compared in terms of profitability, however, it is not something we ask entrants to submit, nor something that many would be comfortable sharing.
Next: Product and services
Products and services
We can dig deeper into the categories of products and services to better understand how the CRN Fast50 delivered such strong performances.
The biggest revenue drivers for the CRN Fast50 were managed services followed by professional services. In fact, our entrants told us that these two types of service offerings represented more than $400 million of total channel business, or more than 50 percent of the total turnover of this year’s group.
The biggest managed services provider, by far, was Perth’s Kinetic IT (No.26), which specialises in outsourcing and whose $179.8 million revenue heavily distorts the overall managed services number. Without Kinetic, professional services were the biggest money-spinner, with RXP Services (No.20), Revolution IT (No.44) and Araza (No.3) all particularly strong in this area.
‘Public cloud and infrastructure-as-a-service’ was the third largest category in terms of revenue, with entrants claiming to have driven more than $50 million of public cloud and IaaS business. However, the major contributor to this segment was publicly listed Bulletproof Group (No.16), which celebrates its third CRN Fast50 appearance this year. The $47.2 million-turnover company, which gets 80 percent of its revenue from public cloud and the rest from services, is one of the premier local Amazon Web Services partners, and is also increasing its focus on the Microsoft cloud.
None of the other providers came close to driving so much revenue from public cloud. VMtech (No.33), which last year won the CRN Fast50 Editors Award, did about $3 million in public cloud/IaaS, as did Blue Apache (No.35). Cloud Plus (No.25) and VentraIP (No.28) rounded out the top five in terms of public cloud/IaaS revenue.
Software development was a significant part of the mix this year, thanks to RXP Services, Outware Mobile (No.48) and first-timer Glintech (No.41). Brisbane-based Glintech turned over just shy of $12 million in the 2016 financial year, growing off the back of its position as a leading Atlassian partner and solid revenues from IBM.
This year’s fastest-growing company, The Missing Link Security, drove the largest information security revenues of any company. The rest of the top five infosec providers were, in order of revenue, VMtech, SecureWare (No.23), Enosys (No.19), and Cloud Plus.
New South Wales-based companies LBNCo (No.40), did the majority of its revenue in carrier services, as did Telegate (No.17), in its fourth CRN Fast50 appearance.
Customer segments
The largest chunk of CRN Fast50 revenue came from enterprise and government customers – no surprise, really, given the bigger budgets and larger projects involved.
In general, smaller providers leant more toward the consumer, SMB and midmarket, while the larger companies did more enterprise and government work. But that wasn’t a hard and fast rule. Of the five largest companies this year, BigAir (No.50) and Bulletproof Group (No.16) claimed their largest share of revenue from the 50-1000 seat midmarket sector. Kinetic IT (No.26) is a government specialist, while RXP Services (No.20) got 80 percent of its revenue from the customers over 1000 seats.
At the other end of the scale, first-timer Strut Digital (No.21), turned over $3.6 million but did the majority of its business in the enterprise sector. Sydney-based Strut is an Amazon Web Services-focused channel partner, and was the first Australian partner to win a customer to AWS’ 80-terabyte physical data migration device, Snowball – migrating Bauer Media data to S3.
The same small-meets-big theme applies to $5.7 million-turnover 1ICT (No.39), which also got 80 percent of its business from enterprise customers. Brisbane-based 1ICT, which claims Apple and Microsoft as its biggest vendors, has secured some big-name customers in the year, including Domino’s Pizza, Goodstart Early Learning and Navman GPS devices.
Vendors
The question we always want to understand is, which vendors’ solutions drove the best results? We asked all entrants to provide details on their closest vendor partners, and how much each company represented in revenue.
This data is intended as a guide only; some entrants provided granular details of even their smallest partners, while others only submitted their largest vendors. Some listed no vendors at all, which perhaps shows how many companies in the channel now see themselves as pure‑play service providers.
However, slicing the data does raise some interesting trends. This year, infrastructure vendors featured heavily among the CRN Fast50 than in 2015, no surprise given that hardware revenues were also higher than last year.
Despite many in the channel embracing cloud, hardware is still prominent. For the high-revenue traditional players, namely Dell, Cisco and Hewlett Packard Enterprise, overall revenue came from a bevy of partners. They were the three most popular infrastructure vendors to work with. Over a dozen providers on this year’s CRN Fast50 marked Microsoft as an important vendor, making it the single most popular company for our CRN Fast50.
The high revenues generated by newer entrants to the market, such as Pure Storage, FireEye and Palo Alto Networks, was largely down to a small number of specialist partners. Almost all of Pure Storage’s revenue was driven by NGage Technology Group (No.10); most of FireEye’s sales came from The Missing Link Security (No.1) and the bulk of Palo Alto Networks’ revenue was generated by Enosys (No.19) and SecureWare (No.23), both told us that the security vendor was their most important partner.
Two IT firms, Katana1 (No.7) and VMtech (No.33), drove NetApp, each doing more than $5 million of business with the storage firm.
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