With most small tech firms describing themselves as ‘disruptors’, it's sometimes difficult to distinguish those that are gaining real traction in their markets. The Emerging Stars programme utilises the Megabuyte scorecard's rigorous analysis to identify the UK's 25 best-performing smaller software and ICT businesses.
Now in its fifth year, the Emerging Stars programme, sponsored by Grant Thornton and Nat West, illustrates the rising bar for top performers in the UK tech market. It is also fertile ground for M&A and growth capital investment, with more than 25% of the 2020 winning cohort having undertaken some form of transaction over the last 18 months.
Attributes of the fastest-growing UK tech companies
So what does it take to make the grade?
With robust qualification criteria, the report scores the performance of public and privately owned UK tech companies that have reported revenues between £3 million and £10 million in their latest financial year. The scorecard focuses on the key metrics of growth (particularly organic growth performance), profitability, and scale.
To make the upper quartile of performance, businesses needed to deliver:
- revenues of at least £8.2 million
- organic revenue growth of 15.3%, with average organic revenue growth across the Emerging Stars cohort hitting an impressive 45.9%;
- four year revenue CAGR of 16.3%
- EBITDA margin of 12.7%
- EBITDA margin expansion of 4.9 pp
Software, digital transformation and managed services lead the way
Software continues to be the hottest segment of the market, with scaling recurring revenue software businesses in the £3 to £10 million ARR range in really high demand. The accelerating drive within businesses to digitally enable their organisations has seen a step up in the number of pure play consultancies and digital transformation-led businesses in the top 25.
The last 18 months have also seen a material uptick in managed services and digital infrastructure, enabled by the accelerating move to the cloud and the enhanced focus on building out the necessary infrastructure to meet the demands of the UK post-COVID-19 economy, with a number of the strongest performing businesses falling into these categories. Azure, AWS, and Google Cloud skills continue to be in high demand.
Activity in the b2b telecoms market has been driven by the private equity-backed buy and build platforms, building out scale, geographic coverage, and capability. From an organic growth perspective, the spotlight has fallen on the IOT platform and connectivity market, where the growth in the market for connected devices and the increasing focus on more data intensive applications is driving performance.
2022 Megabuyte Emerging Stars - Winning companies
Overall winner: FSP
Fastest Growing: CyanConnode
Best performing company - IT Consulting: FSP
Best performing company - IT Managed Services: SecureCloud+
Best performing company - Enterprise: Envitia
Best performing company - Telecoms Services: Jola
Best performing company - Business & Consumer: Cardinality
Best performing company - Government & Healthcare: Bromcom Computers
Best performing company - Security & Infrastructure: RealVNC
Best performing company - Business Process Outsourcing: bChannels
Download the Megabuyte Emerging Stars report
For more information on the Megabuyte Emerging Stars programme and the UK tech market get in touch with Andy Morgan.
