Background

For the second year Moss Adams LLP has worked in partnership with AeA and Marsh America to compile and produce a bound report presenting financial and operational data from over 170 technology companies. The result is a detailed report of financial benchmarks for some of the most common technology segments. The study contains extensive data on the financial health, profitability and productivity of companies in the technology sector. The study provides an updated snapshot of the major finance and practice management metrics for the technology industry.

Casting as large a net as possible, the surveys were distributed to technology companies across the country. The survey encompassed several areas of financial management practice such as sales per geographic region, income statement detail and employee compensation information.
 

Survey Results

Each technology segment has its own analysis that defines the category and offers segment highlights. The study then breaks out multiple analyses of these areas including sales, productivity, financial ratios, human resources, income statement, balance sheet, liquidity, asset utilization, return, and leverage.

Not surprisingly, the industry with the highest average gross margin as a percent of sales was the Prepackaged Software segment with over 80%, followed closely by Custom Software at 74%. Prepackaged Software also had the highest average sales and marketing expense as a percent of net sales. The software industry also boasts the highest average net sales by employee.

A highlight of the survey is the Sources of Funding section. This past year, 31% of the participating companies chose bank loans as their choice of funding, while only 10.5% elected to raise fund via venture capital.

One of the more useful sections for each segment is the productivity analysis. In the absence of consecutive yearly studies, one of the study’s sections traces each segment’s annual net sales growth over the past three and five years. As the study resumes as an annual event for a wider group of participating companies each year, the study will be able to trace in more detail the underlying factors contributing to the sales trends.

Overwhelmingly, all technology segments derived the majority of their average product sales from the United States market. However, both Test & Measurement and Prepackaged Software drew over 20% of average product sales from the European market. Manufacturing and Factory relied on the U.S. for 95% of their total net sales.

To order a copy or to add your name to the invitation list for the 2007 survey please contact Terry_Byington@aeanet.org or call 425-497-1707. Supplies of the 2004 survey are limited.
 

This page was last updated on 09/06/06.  
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