Shares of Montreal software firm Lightspeed POS Inc. jumped 18 per cent on their first day of trading on the Toronto Stock Exchange.
The 14-year-old company, which provides retailers and restaurants with cloud-based software to help them manage point-of-sale and back-office functions, saw its shares close at $18.90 Friday. They were sold at $16 to buyers of the initial public offering and trade under the ticker symbol LSPD.
The IPO price is higher than the $13 to $15 range the company had expected when it announced its plans to go public last month. David Wismer, head of technology investment banking at BMO Nesbitt Burns, said strong investor demand prompted the company to boost its IPO price and raise the deal size from $200-million to $240-million.
Prior to going public, Lightspeed was part of an elite club of tech “unicorns,” or private companies valued at $1-billion or more. The IPO price valued it at about $1.4-billion and based on Friday’s close, and its market capitalization is now more than $1.6-billion.
Mr. Wismer called Lightspeed’s successful IPO a win for the technology industry in Canada.
“We need more billion-dollar tech companies that are headquartered here, and Lightspeed is now another one on that list, which I think is important for all the other private tech companies in this country,” Mr. Wismer said.
He added that the successful offering also bodes well for other IPOs in 2019 – a year that was anticipated to be a quiet one in terms of new issue activity.
“I think people are going to be a bit surprised at how well this IPO went and the strength of the demand,” Mr. Wismer said. "The equity markets are clearly open.”
Although the bulk of Lightspeed’s clients are south of the border and half of its order book comprises American investors, the company’s chief executive Dax Dasilva said that going public in Canada was important to the company. Internally, they had dubbed the IPO “Project Patriot,” Mr. Dasilva said.
“I’m really proud of where the tech ecosystem is today in Canada and I hope that this step by Lightspeed is something that is watched and is encouraging for other great Canadian tech companies that are emerging," he said.
The Lightspeed IPO comes ahead of a number of high-profile public offerings expected this year from Silicon Valley heavyweights, including Slack Technologies Inc., Lyft Inc., Uber Technologies Inc. and Palantir Technologies Inc.
Lightspeed’s software is used in more than 47,000 customer locations in about 100 countries. Last year it processed $13-billion worth of transactions, although the company failed to turn a profit. Its net loss for the fiscal year ended last March 31 was US$98-million and its operating loss was US$21.9-million.
But the company has high hopes that its new payments offering, which it rolled out in the United States at the end of January, will accelerate its revenue growth.
“Up until now we’ve been a business that sells software subscriptions, so 90 per cent of our revenue is recurring revenue, and most of that is software,” Mr. Dasilva said.
“But we see a future where we grow alongside our customers by offering them payment solutions, where part of their gross transaction volume is part of our revenue stream. I think that’s key for the company and we’re excited about its potential.”
Stay up to date on all our Streetwise stories. We have a Streetwise newsletter, covering mergers and acquisitions, plus financial services news. It is sent Tuesday to Saturday morning. Sign up today.