Verticalscope Holdings Inc., has become the latest Canadian technology company to slash its staff amid an continuing slump in the sector.
The Toronto digital media company, one of a slew of Canadian entities to go public on the Toronto Stock Exchange during the tech frenzy of 2020-21, said after the close of markets Wednesday that it would cut 60 jobs, or 22 per cent of employees. Like other companies, Verticalscope had expanded its work force aggressively in recent years, and “with the economic uncertainty that lies ahead, we must prioritize our biggest opportunities and make sure we have the proper cost structure in place to pursue them,” Verticalscope chief executive and founder Rob Laidlaw said in a statement.
Verticalscope joins several Canadian and global tech companies in enacting sweeping layoffs since the start of this year, including CFT Clear Finance Technology Corp. (Clearco), Thinkific Labs Inc., Lightspeed Commerce Inc., Clutch Technologies Inc. and Benevity Inc. According to technology job loss-tracking site layoffs.fyi, January’s 82,000-plus layoffs across the sector globally was the worst monthly tally since the start of the pandemic three years ago.
Verticalscope, 37 per-cent-owned by the group that purchased Torstar Corp. in 2020 and whose partners Paul Rivett and Jordan Bitove recently agreed to a corporate divorce, also released preliminary results Wednesday showing its business rapidly deteriorated in the fourth quarter.
Verticalscope said it expected revenue for the quarter ended Dec. 31 to slump by 10.9 per cent to $19.1-million, compared with the same period a year earlier, dragged down by a 23.5-per-cent drop in e-commerce revenue and a 5.5-per-cent fall in digital advertising revenue. It forecast its adjusted operating earnings would come in at $7.2-million in the quarter, down 22.9 per cent year-over-year.
“Fourth-quarter results came in lower than last year as a result of macroeconomic weakness through the holiday shopping period which translated to lower advertising rates as well as reduced volume from e-commerce partners,” Verticalscope president Chris Goodridge said in a release.
The company’s revenue forecast was even lower than the $19.8-million that RBC Capital Markets analyst Drew McReynolds forecast the company would generate after management in November warned its key advertising market had entered a recession.
VerticalScope runs more than 1,200 websites for communities of enthusiasts of topics ranging from snowboarding to beekeeping. It has made hundreds of acquisitions since its founding in 1999 and claims more than 100 million monthly active users. It generates revenues primarily from advertising and referral fees for e-commerce partners that sell to site visitors.
The company was one of 20 tech companies to go public on the TSX from July, 2020, through the end of 2021 as investor interest spiked for digital companies that benefited from widespread sheltering at home. That compared with a pace of roughly one tech IPO on Canada’s senior exchange per year dating to the late 2000s.
Like other IPOs during that stretch, Verticalscope was strongly received. It went public in June 2021at $22 a share after receiving strong demand from investors and raising $125-million. But the stock has sold off sharply since late 2021 like most other technology stocks, closing Wednesday at $8.47.