New Mexico’s Flying 40 technology companies are roaring again after successfully weathering the worst ravages of COVID-19.
This year’s list of fast-growing technology firms shows solid, and sometimes spectacular, growth in 2021 by nearly every Flying 40 awardee, collectively pushing the group’s overall annual revenue and employee base to new heights, said Sherman McCorkle, chairman and CEO of the Sandia Science and Technology Park Development Corp., a principal sponsor and organizer of the annual Flying 40 awards.
Last year, many of those same companies had reported flat or negative growth in 2020, as businesses everywhere dealt with pandemic-induced economic chaos.
But their collective performance in 2021 demonstrates the agility and vitality of the state’s high-flying tigers to successfully navigate the coronavirus downturn and burst free from its lingering drag, McCorkle said.
“I wasn’t expecting the numbers this year to be this good,” McCorkle told the Journal. “These companies’ achievements display remarkable management talent. I am genuinely and happily surprised.”
Overall, companies on this year’s list reported a combined $1.36 billion in revenue for 2021, up 34% from the $1.017 billion they collectively reported in 2020. Their workforce also grew by 18%, from 4,940 employees in 2020 to 5,821 last year.
In contrast, combined revenue in 2020 had dropped by $143 million compared with 2019. Half of the Flying 40 honorees last year reported income stagnation, with 13 registering outright declines, and seven others experiencing just a modest increase, or, at best, flat performance.
Although four companies did report a year-over-year drop in revenue this year, nearly every other company on the list registered double-digit growth, and some reported triple-digit expansion, said Randy Wilson, chief financial officer for SSTP Development Corp.
“That shows the Flying 40 companies have weathered the COVID storm, and they’re now finding new opportunities to grow,” Wilson told the Journal. “They’re also expanding their workforce. Over the past two years since 2019, companies on the list have added more than 1,100 new jobs, despite COVID happening.”
The Flying 40 awards, which launched in 1998, aim to celebrate the success of the homegrown firms included on the annual list, while also drawing attention to the critical role New Mexico’s technology sector plays in diversifying the local economy.
To be considered for inclusion, company growth is measured over five years, from 2017-2021.
This year, a total of 39 companies made the honor roll, demonstrating impressive expansion and staying power since 2017. Indeed, last year’s $1.36 billion in combined revenue represents a 90% increase from five years ago, when those same companies reported a collective $716.3 million in revenue.
The workforce also grew by 62% in that same period, from 3,596 employees in 2017 to 5,821 last year. And those are some of the state’s highest-paying jobs.
“The average pay at these companies is two-to-three times higher than the average salary of most New Mexicans,” McCorkle said. “These are extremely valuable companies that are offering high-quality employment.”
With the Flying 40 now celebrating its 25th-year silver anniversary, the organizers looked back at the long-term achievements of companies on the annual list. Many have become Flying 40 stalwarts that have continuously appeared as awardees for many years.
That includes engineering mammoth Applied Research Associates, which heads the list of top revenue companies every year as the Flying 40’s largest firm. The company reached $418.6 million in revenue and 1,387 employees in 2021, up from $236.4 million and 1,011 employees five years ago.
Three other stalwarts — homegrown information technology firms ANM, Speridian Technologies and Abba Technologies — have also steadily expanded over many years into Flying 40 top-revenue earners.
ANM and Speridian, in particular, reported spectacular growth since 2017.
ANM grew from $92.4 million in revenue and 100 employees five years ago to $200 million and 300 employees in 2021. And Speridian reported a 240% hike in revenue in the same period, from $49.6 million to $168.2 million, while doubling its workforce from 1,095 people to 2,200.
Many other firms are also rapidly scaling up the Flying 40 rankings, which are divided into three categories of companies: Top revenue-producing firms independent of their annual financial growth, top revenue-generating companies with more than $10 million in annual income, and fast-growing firms between $1 million and $10 million in revenue.
A number of awardees have advanced through those lists year after year.
Verus Research, for example, which launched in 2014, burst into the list of top revenue earners last year after reaching $24.9 million in annual income and 79 employees in 2020, up from $8.2 million and 30 employees five years earlier. And that company — which does design, test and evaluation work for high-power microwaves and nuclear engineering — remained on the top revenue list again this year, after growing its earnings another 27% in 2021 to $31.6 million, and expanding its workforce to 91 people.
Likewise, engineering firm Fiore pushed into top-earner status last year after reaching $21.7 million in revenue in 2020. It remains there today, after growing its income by another 46% in 2021 to $31.7 million.
Many companies have come and gone from the Flying 40 over the years. But overall, the growth in total revenue and employee counts by all firms since 1998 shows healthy expansion and fortification in New Mexico’s technology sector, Wilson said.
“When we first began tracking collective annual revenue 25 years ago, it totaled just $400 million,” Wilson said. “Today, at $1.36 billion, it’s 3.5 times higher. And 25 years ago, there were about 2,600 employees, while today, it’s more than twice that amount.”
More work to do
The annual list reflects diversity in New Mexico’s technology sector, with a broad range of engineering, information technology, aviation and aerospace businesses.
“These companies work in everything from satellites and energy technology to IT support,” Wilson said. “It’s a wide range of businesses, products and services that together create a strong foundation to keep moving forward.”
In fact, the list provides only a small snapshot of the state’s technology sector. In the IT industry alone, some 2,600 businesses currently operate in New Mexico, with nearly 33,000 employees and an estimated $4.6 billion in direct economic impact, according to Cyberstates 2022, an annual state-by-state analysis of the U.S. technology industry published by the Computing Technology Industry Association.
Nevertheless, New Mexico’s technology industry still lags significantly behind most neighboring states, McCorkle said.
In that regard, apart from celebrating the success of the Flying 40 companies, the annual awards also represent an appeal for more government support and public-private initiatives to build the state’s entrepreneurial ecosystem.
“To truly diversify the economy, we need to do a lot more to develop the state’s technology industry,” McCorkle said.
Most New Mexico firms are focused on federal spending, generally supplying goods and services to government customers, rather than building consumer-oriented products for commercial markets, McCorkle said. That’s a reflection of heavy federal involvement in New Mexico through the national labs and military bases, which gave rise to much of today’s local technology companies.
“We need to diversify our manufacturing base,” McCorkle said. “New Mexico manufacturers tend to sell to the federal government more than companies in other states, and it’s difficult for businesses here to diversify out of that. That’s a challenge for local firms, including the ones in the Flying 40.”
And more needs to be done to attract talented professionals and investors to New Mexico.
Industry associations are now actively working on that in cooperation with state agencies, and some Flying 40 awardees are contributing to those efforts.
In late May, for example, the Albuquerque Regional Economic Alliance created a new Technology Innovation and Advisory Council to unite local entrepreneurs in a collective effort to identify and build on New Mexico’s technology strengths by pursuing strategies to attract more investment and development. It appointed Charles Rath, president and CEO of data analytics firm RS21, as chair of the new council.
RS21 is a repeat Flying 40 awardee that has ranked among the top two firms on the list of fast-growing companies with under $10 million in revenue for three years in a row.
“I believe the future of New Mexico’s economy will be driven by technology, but we’re nowhere near where we need to be,” Rath told the Journal. “The council will help identify obstacles and challenges that we need to address to catch up with surrounding states where technology industries are thriving.”
The Flying 40 awards helps boost those efforts by clearly demonstrating the benefits, Wilson said.
“The technology sector brings growth in high-paying jobs that year-by-year contribute to the strength and vitality of our community,” he said.