Coveo adds to record year for Canadian tech acquisitions abroad, buying ‘complementary’ U.K. corporate search engine provider

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Coveo Solutions Inc., a Quebec City company that sells search engine technology to giant corporations, has bought a London-based competitor, adding to a record tally of foreign acquisitions by domestic technology companies this year.

The company said Friday it had purchased Qubit Digital Ltd., which provides search functions used by retailers and consumer products makers including Kate Spade, LVMH and Estée Lauder to recommend products and gather customer insights on their e-commerce sites.

Coveo chief executive officer Louis Têtu said in an interview the acquisition will help expand Coveo’s presence in the e-commerce sector and the EU and U.K markets, accelerating its product development plans, particularly in the area of merchandising. “Qubit was very complementary to what we do,” he said.

Coveo offers AI-powered tools known as “insight engines” used by corporations such as Salesforce Inc. , Dell Technologies Inc. and Adobe Systems Inc. to offer the same kind of personalized, artificial intelligence-driven search results on their websites as those provided by Google or Amazon.

Market research firms Forrester and Gartner rank Coveo as one of the global industry leaders, alongside France’s Sinequa SAS. Other competitors are Elasticsearch BV, Mindbreeze GmbH and International Business Machines Corp.

In 2019, Coveo became the second enterprise led by Mr. Têtu to surpass a US$1-billion valuation when it raised $227-million in equity, led by Ontario Municipal Employees Retirement System, valuing Coveo at more than $1.3-billion. His previous publicly traded enterprise software company, Taleo Corp., was bought for US$1.9-billion by Oracle Corp. in 2012.

Brian Kilcourse, managing partner with Retail Systems Research near San Francisco, said both Coveo and Qubit are important components of an emerging trend in e-commerce that has seen an increase in the personalization of online shopping experiences using AI.

“They both figured they didn’t have to reinvent the website or user interface, but they wanted … a powerful added functionality that would make the experience more personal, satisfying and exciting to consumers.”

Qubit, founded by a team of ex-Google employees including CEO Graham Cooke, has raised US$76-million since its founding in 2010. When it announced a US$40-million venture capital financing in early 2016 led by Goldman Sachs and backed by the venture capital arms of SAP and Salesforce, Mr. Cooke told Techcrunch Qubit was on track to reach the US$100-million revenue mark “pretty soon.”

Qubit hasn’t announced a financing since, and Coveo didn’t disclose the value of the deal, which will see it bring on 90 of Qubit’s employees, expanding Coveo’s ranks to 750 people.

It’s the second acquisition for Coveo, and adds to a record number of foreign acquisitions by Canadian tech companies this year, including Lightspeed POS Inc. , SemiosBio Technologies Inc., Themis Solutions Inc. (Clio), Tophatmonocle Corp. and Magnet Forensics Inc. As of Tuesday, Canadian technology companies had announced 218 deals so far in 2021, surpassing the previous full-year record of 183 set during the dot-com bubble peak year of 2000, according to Refinitiv.

Mr. Têtu said “we constantly analyze the market and look at opportunities,” but added “it’s not like we have a goal to grow through acquisitions, but to be the best at what we do and deliver the highest value for customers. Coveo is a long game, it’s about being the last one standing in an industry that is significant and important.”

Coveo is also one of a slew of Canadian companies that have engaged investment bankers this year to explore potential initial public offerings. Mr. Têtu declined to comment on whether Coveo might go public or when, saying only “an IPO is always a discussion point, just like a financing is, and mergers and acquisitions and investments are,” and dismissed it as “nothing but a financing event.“

“Could we [go public]? Yes. Do we need to? No.”

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