Two service providers rank among fastest-growing tech companies

Contrary to popular belief, not every telecom service provider is in the dumps, according to this year’s Deloitte Technology Fast 500 ranking.

The professional service firm’s annual survey, which ranks the fastest growing technology companies in North America based on average percentage revenue growth over five years, lists service providers Paetec Communications and Z-Tel Technologies as Numbers 2 and 3, respectively.

Topping the list is TheraSense, a maker of monitoring systems for testing diabetics. Rounding out the Top 5 are WebMethods, an enterprise application integration software company, and Advertising.com, an interactive advertising network.

Paetec, a Fairport, N.Y.-based supplier of local and long distance services, including voice and data, boosted its revenue from $150,000 in 1998 to $289.2 million in 2002. Tampa-based Z-Tel’s revenue exploded over that period from $140,000 to $235.3 million. Not all is well at Z-Tel, which has been socked with $9.1 million in losses for the first six months of the year, partly attributable to its loss of MCI as a key customer and business partner. Because Paetec is privately held, it’s harder to get a reading on its finances beyond what the company chooses to reveal. 

Communications and network companies accounted for 16% of the Fast 500, up slightly from 15% last year and 13% the year before. Software companies ruled, making up 39% of the list.

The western U.S. accounted for 32% of companies on the list, while companies from the northeast added up to 23% of those ranked.

Twelve companies on the list boasted revenue of $1 billion or better, including service provider Level 3 Communications.

Storage software company Veritas holds the distinction of being the only company to make the list every year since the ranking’s inception in 1995. Veritas ranked 404 this time around.

Other network companies ranked included last year’s winner, IP services company ITXC, which fell to Number 32. Extreme Networks, ranked second last year, dropped to Number 194. It’s not unusual for companies to fall significantly, in part because as their revenue grows, it’s more difficult to sustain such high percentage growth.

Companies qualifying for the ranking had to have revenue of at least $50,000 in 1998 and $1 million in 2002. Both public and private companies could qualify.