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Louis Têtu of Coveo SolutionsRenaud Philippe/The Globe and Mail

Coveo Solutions Inc. has set a price range of $13 to $15 per subordinate voting share and plans to raise $215-million that comes on the heels of a string of disappointing public listing efforts by Canadian technology companies.

Quebec City-based Coveo filed last week to go public on the Toronto Stock Exchange, making it the second enterprise software company led by serial entrepreneur Louis Têtu to head to public markets – and the latest in a slew of Canadian technology companies to do so. It revealed the pricing and deal size in an updated filing with regulators Monday.

It has been an underwhelming fall for Canadian tech IPOs on the TSX. Three of the past four technology companies to go public on Canada’s senior exchange – D2L Corp., E Automotive Inc. and Q4 Inc. in the past two weeks – have all subsequently traded below their issue prices. Last week, Montreal online advertising company Sharethrough delayed plans to go public in response to the soft market reception for Canadian tech IPOs.

There have now been 19 Canadian tech IPOs on the TSX that have raised $50-million or more since July, 2020. By contrast, there were just 12 Canadian tech IPOs on Canada’s senior exchange in the 11 years ended December, 2019. But despite the record year for both public and private fundraising by Canadian technology companies, the public markets performance of pandemic-era new issues has lagged overall markets.

Coveo sells artificial-intelligence-powered technology known as “insight engines” to more than 475 customers, including BlackBerry, Salesforce, Lee Valley, BRP and Xero, that offer the same kind of personalized, relevant search results on their websites as those powered by Google or Amazon.

Market research firms Forrester and Gartner rank Coveo as one of the global industry leaders, alongside France’s Sinequa SAS. Coveo last month paid US$42.9-million for London-based Qubit Digital, which provides software used by retailers and consumer products makers including Kate Spade, LVMH and Estée Lauder to provide personalized product recommendations and gather customer insights on their e-commerce sites.

The 625-person company’s main outside shareholders are U.S. investment giant Elliott Management Corp., the labour-sponsored Fonds de solidarité FTQ, the Quebec government’s Investissement Québec investment arm, sovereign wealth fund Qatar Investment Authority and Ontario Municipal Employees Retirement System. Mr. Têtu holds an undisclosed amount of multiple voting shares.

The 57-year-old Mr. Têtu invested in Coveo in 2008, four years after its founding. He joined as chief executive officer in 2012 at the request of co-founder, president and chief technology officer Laurent Simoneau, the same year Mr. Têtu’s previous company, Nasdaq-listed Taleo Corp., was purchased by Oracle for US$1.9-billion.

Mr. Têtu was joined by Jean Lavigueur, the chief financial officer, and chief operating officer Guy Gauvin, who have worked with him on several previous companies dating to 1990, including supply chain management software company Baan SCS and Berclain Group.

Of note will be how investors respond to Coveo’s operating performance during the IPO roadshow. Coveo is the latest in a string of IPO-bound Canadian software companies to come forward with a relatively soft combination of revenue growth and operating profitability, which some market observers have told The Globe and Mail muted demand for previous offerings.

In Coveo’s case, it generated revenue of US$37.7-million in the six months ended Sept. 30, up 23.1 per cent from the same period a year earlier. The company’s revenue grew by 16.9 per cent in its last full fiscal year, which ended March 31, 2021, and 25.1 per cent in the year before that. Meanwhile, it posted operating losses equal to 37.4 per cent of revenue, 31.7 per cent and 25.7 per cent, respectively, in the corresponding periods.

According to the prospectus, Coveo has raised US$202-million to date from private capital raises, which has primarily funded the company’s growth to date.

The IPO is being co-led by BMO Nesbitt Burns, Merrill Lynch Canada, RBC Dominion Securities and UBS Securities. The underwriting team also includes Canaccord Genuity, National Bank Financial, Scotia Capital and TD Securities.

Coveo derives about 85 per cent of its revenue from the United States.

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