Q4 Inc., a Toronto-based software company that operates a cloud-based investor relations platform, has filed to go public on the Toronto Stock Exchange, joining a slew of other software companies that have successfully tapped the public markets to raise money during the pandemic.
A source familiar with the transaction told The Globe and Mail that the company is aiming to raise up to US$150-million from the initial public offering. The Globe is not identifying the source because they are not authorized to speak publicly about the offering.
The company filed its preliminary prospectus with regulators on Tuesday afternoon, but the document did not disclose when Q4 plans to go public, nor the expected pricing range for the IPO.
The Globe first reported on Q4′s intentions to go public in early May, alongside a string of companies in the mining, technology and health care sectors that are also preparing IPOs in the coming months.
Q4 designs software geared toward managing the investor relations needs of public companies. The technology facilitates webcasts and earnings calls for investors, and organizes financial statements on the investor relations section of company websites. It also provides data intelligence services to companies, analyzing capital flows and capturing information on activist shareholder activity.
Some of the biggest tech companies, such as Netflix Inc. , Spotify Technology SA , Square Inc. and Shopify Inc. , use Q4′s technology. The company has approximately 2,400 clients, and touts itself as the “industry’s only comprehensive investor relations platform.” Q4 software facilitates roughly half a million investors each quarter at virtual events.
In a letter to investors included in the prospectus, chief executive officer Darrell Heaps said 50 per cent of S&P 500 companies and 63 per cent of the Dow Jones Industrial Average companies use Q4 software for investor relations purposes. “If you have visited a public company’s investor relations website or joined an earnings call in recent years, you have likely used Q4′s software,” he wrote.
The New York-based venture capital firm Ten Coves Capital is one of the biggest investors in Q4, alongside Mr. Heaps. The company’s revenue in 2020 was $40.4-million, an 80.3 per cent jump from the previous year. Nearly 90 per cent of the company’s revenue last year was recurring, meaning that it was derived from clients that renewed their subscriptions to the software.
The company, however, is not yet profitable. It charted a net loss of $13-million in 2020, a slight increase from a net loss of $11-million in 2019. Q4 intends to use the proceeds from the raise to repay an outstanding US$20.8-million credit facility and to pursue new acquisitions – much of the company’s growth last year was driven by acquisitions.
CIBC World Markets Inc., National Bank Financial Inc. and Credit Suisse Securities (Canada) Inc. are lead bookrunners on the deal, alongside Canaccord Genuity Corp., Raymond James Ltd., RBC Dominion Securities Inc., Stifel Nicolaus Canada Inc., TD Securities Inc. and INFOR Financial Inc. Q4 shares, once listed, will trade under the symbol QFOR.
Q4 is expected to be followed by VerticalScope, a Torstar Corp.-controlled digital media company that is also set to launch its IPO process this week.
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