Investor relations software provider Q4 Inc. has resumed efforts to list on the Toronto Stock Exchange, upping the share price range for its planned $150-million issue and revealing the reasons behind its June decision to delay its initial public offering.
The company said in a securities filing Thursday it had set a range of $14 to $17 per share for the offering, up from its previous range in June of $10.50 to $13 a share. Q4 reiterated it plans to spend US$50-million to US$70-million of the proceeds on mergers and acquisitions, which have helped fuel the company’s growth in the past. The Globe and Mail reported Wednesday Q4 would be resuming its IPO process, led by underwriters CIBC Capital Markets, National Bank Financial and Credit Suisse.
With the four-month delay, Q4 reported updated results that showed its business has continued to grow: Revenue in the first half was US$28.6-million, up 48.4 per cent. Its loss in the period more than tripled year-over-year, to US$14.6-million.
The company said the recurring portion of revenue, on an annualized basis, had improved to US$50-million as of June 30, up from US$42.6-million at the end of 2020.
Meanwhile, its customer count grew by nearly 5 per cent from March 31 to June 30, reaching 2,505 public companies, including such names as Shopify Inc.; Walmart Inc.; Merck & Co., Inc.; Visa Inc.; McDonald’s Corp.; and Netflix Inc. Q4 counts half of all S&P 500 companies as customers.
Q4 makes software for managing the investor relations needs of public companies. Its technology is used for online webcasts and earnings calls, and it organizes financial statements on the investor relations sections of company websites. It provides data intelligence services to companies, analyzing capital flows and capturing information on activist shareholder activities. Its software helps roughly half a million investors each quarter at virtual events, and about 12 million investors interact with its corporate customers each month through its network of investor websites.
The company’s IPO process had been going well in late spring and was getting a favourable response from investors when it put the brakes on in June, without publicly explaining why.
A source familiar with the matter told The Globe and Mail this week the delay was caused by one of the company’s business partners contacting it during the IPO process to renegotiate a contract. Q4′s leadership didn’t want the matter to distract from the offering, so the company decided to delay going public until after it had been resolved.
The prospectus reveals the issue pertains to a nascent relationship Q4 had struck with U.S. shareholder communications and corporate services company Broadridge Financial Solutions Corp. In March, Q4 launched a new virtual shareholder meeting (VSM) product in partnership with Broadridge, which in turn sold the product to its customers. That platform hosted about 1,500 events during the second quarter. But on June 10 – the day Q4 filed its last updated prospectus – “we received correspondence from Broadridge raising issues with specific elements of the VSM service level agreement.”
That prompted Q4 to analyze the business “to review its strategic fit and financial profile within the context of our overall product offering,” the prospectus said. That led the two companies “to mutually terminate the partnership” and for Q4 to exit the VSM business.
Q4 stated in the prospectus that decision led it to “focus valuable resources on other strategic initiatives that better align with our long-term commercial and financial targets.” It is now moving customers onto its own platform, “thereby reducing our reliance on third-party vendors … while ultimately driving overall margin expansion.”
Q4 continues to maintain strategic relationships with other companies that serve publicly traded entities, including press release distributor BusinessWire, the New York and Toronto Stock exchanges and S&P Global Market Intelligence.
The company also paid tribute in its deal marketing materials to Brent Layton, CIBC’s co-head, technology and innovation investment banking, who passed away recently. Mr. Layton, who had been battling cancer, was in his early 40s.
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