Canada’s newest public company, Docebo Inc., is “unusual in many ways,” CEO Claudio Erba admits.
For starters, the employee-training software provider, which debuted on the Toronto Stock Exchange last Tuesday – the exchange’s first IPO in seven months – has more than half its 300 employees, including its chief executive officer and chief operating officer, based near Milan. It moved its corporate domicile to Canada in 2016, but just 35 staff, including chief financial officer Ian Kidson, work in Docebo’s Toronto headquarters. “I describe Docebo as a global company with a strong Canadian presence and an Italian soul,” Mr. Erba says.
Then there’s the matter of the offering. Conventional wisdom holds that tech companies should generate $100-million in annualized revenue, have an equity valuation of $1-billion-plus and raise $100-million when they go public. Docebo’s revenue is running at a $33-million annual pace and its $75-million stock offering valued the company at $455-million. Several larger, private Canadian software firms have raised greater sums this year from private capital investors.
“If you had the blueprint of becoming a successful [software] company and then going public, we [had] the opposite blueprint,” Mr. Erba said in an interview. “What happened in the Docebo story is that nothing happened like it should have happened.”
Docebo might look a bit young to be public, but it is on a promising trajectory. Its revenues have grown by 76 per cent on average in the past three years, while its average contract size has doubled to $20,000. It is a well-regarded challenger in the crowded “learning management system” space, competing against established players including CornerStone onDemand and Saba that also cater to corporations looking to distribute training materials to employees.
Docebo’s software incorporates elements such as social media, artificial intelligence and “gamifying” content to engage users. For example, employees can upload their own informal training videos for colleagues, which smart algorithms tag for relevance and suggest to other workers, who can see whose uploaded videos are most-watched.
“Docebo’s platform is engaging and social, and gives us lots of options for our learning programs,” said Allison Dell, executive director of talent and learning with Cineplex. “For many of our employees, working in one of our theatres is their very first job, so we need to make sure that our learning materials [are] in a format that speaks to them.”
The company’s origins date to 2005, when Mr. Erba built a digital platform to store training material while teaching content-management systems at the University of Florence. Several companies reached out to buy it for their training needs. “I became an entrepreneur by accident,” he said.
After finding early success in North America, Mr. Erba decided Docebo’s source of capital – and home – should be on this side of the Atlantic. He found Toronto financier Daniel Klass, who introduced him to tech entrepreneur and frequent co-investor Jason Chapnik. They invested in 2014. “Once I sat down with Claudio and Alessio [Artuffo, the chief revenue officer, now based in Toronto] and saw the software, about 10 minutes in I said, ‘We want to do this deal,' ” said Mr. Chapnik, now chairman and majority shareholder, who paid $33-million for equity now worth $241-million.
“I’ve always had the feeling Toronto is a very scalable city from a business perspective,” said Mr. Erba, who moved the company’s headquarters here to be close to his backers’ networks. “It’s competitive but friendly, it’s growing.”
For the latest financing, Mr. Erba decided against taking on a private equity investor, who would “stay three years and want to sell the company," he said. “Strategically, we have a longer vision.”
So far investor reaction is mixed. The offering led by Canaccord Genuity and TD Securities was five-times oversubscribed; the stock issued at the top end of its target $14 to $16 per share range. But by Friday’s close, it was down 15 per cent to $13.61. “Of the institutions that received allocations, some portion may have been short-term oriented traders that intended to sell right away and make a quick profit on an oversubscribed deal,” said Mr. Erba. "Our goal has always been for the stock to get into the hands of long-term investors. Hopefully, that is now the case.”
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