Montreal’s Lightspeed POS Inc. has filed to go public on the Toronto Stock Exchange, marking one of just a handful of sizable Canadian tech firms to test public markets in the past few years and the first since a pulled offering filed last year by cloud software firm Dye & Durham Corp.
The 14-year-old company, which provides cloud-based software for retailers and restaurants to digitally manage point-of-sale and back-office functions on a range of computerized devices, is hoping to raise $200-million, sources familiar with the company’s plans who are not authorized to speak publicly told The Globe last month. The expected price and number of shares for sale were not disclosed in the preliminary prospectus filed late Wednesday; those figures will be determined after underwriters BMO Nesbitt Burns, National Bank of Canada and J. P. Morgan Securities market the offering to investors in the coming weeks.
In its filing with Canadian securities regulators, Lightspeed revealed it generated US$72-million in revenue during 2018 and that revenue in its most recent quarter ending Dec. 31 was US$20-million, up 33 per cent from the same period a year earlier and in line with growth over the past few years.
However, the company, like many fast-growing subscription software firms, also generated heavy losses. The company posted a net loss of US$98-million in its fiscal year ended last March 31 and more than US$50-million in each of its two previous fiscal years. Sales and marketing accounted for 51 per cent of total revenues between last January and December, compared to 71 per cent in its 2016 fiscal year. Lightspeed’s operating loss, meanwhile, decreased to US$21.9-million in its 2018 fiscal year from US$34-million the previous year.
With its prospectus under scrutiny by regulators, Lightspeed also revealed its software was used in more than 47,000 customer locations in about 100 countries, handling US$13.6-billion in gross transaction volume generated by its clients on its cloud software platform. The company said on its website more than a year ago that it had nearly 50,000 customers and processed US$15-billion in overall merchant volume. The Globe requested clarification about the change in those figures since 2017; a company official referred the question to an outside press agent, who in turn referred The Globe to the prospectus, declining further comment.
In the prospectus, Lightspeed said that while the number of customer locations continued to rise – increasing by about 6,000 in each of the past two fiscal years – the number of customers paying for more than one service had also expanded to 31 per cent as of Dec. 31. That’s up from 5 per cent at the end of its 2016 fiscal year. The company said it hopes to generate additional revenues from a new payments offering for customers, which it announced last week.
“We believe the opportunity to transform commerce and create opportunity for all, with technology that is available to all, is enormous,” CEO and founder Dax Dasilva said in a letter to investors in the prospectus. “This is an opportunity where we are a leader, and we are just getting started.”
Lightspeed has taken key steps recently to prepare for an IPO. Last year it recruited Brandon Nussey, former chief financial officer of publicly traded Descartes Systems Group, as its finance chief, and added four directors to its board, including former Google CFO Patrick Pichette and former Open Text Corp. CFO Paul McFeeters. The Caisse de dépot et placement du Québec led a US$166-million financing in late 2017 that saw the provincial pension giant buy out Silicon Valley investor Accel Partners and ensure the company stayed independent and Canadian-owned. The Caisse and Mr. Dasilva are the only shareholders with more than 10 per cent of the company, according to the prospectus.
The Lightspeed IPO comes ahead of an expected slew of high-profile public filings from Silicon Valley heavyweights this year, including Uber Technologies Inc., Palantir Technologies Inc. and Slack Technologies Inc. The Globe reported last week that Thoma Bravo LLC, the U.S. private equity owner of Trader Corp., an online automobile marketplace, is preparing for an IPO or sale of the Toronto-based business.
The last sizable Canadian tech firm to go public exclusively on Canadian exchanges was online mortgage services firm Real Matters Inc., in 2017. Last April, Ceridian HCM Holding Inc., which is based in Minneapolis but managed out of Toronto, went public on both the Toronto and New York stock exchanges, raising US$600-million in what was the largest technology IPO in Canadian history.
Sean Silcoff