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Report on Business With eyes on an IPO, Montreal’s Lightspeed POS launches its payments system

Dax Dasilva, founder and CEO of Lightspeed POS.

Christinne Muschi/The Globe and Mail

Montreal software firm Lightspeed POS Inc. is set to file next month to go public on the Toronto Stock Exchange on the heels of Wednesday’s launch of a long-awaited payments service for its tens of thousands of customers.

The 14-year-old company, which produces cloud-based software for retailers and restaurants to manage inventory and accounting, and offers self-service customer ordering, analytics and point-of-sale functions on multiple devices, previously required customers to deal with payments through a third-party. But for the past year, it has been preparing to introduce a payments service, which it rolled out in a pilot project with 200 customers in November.

By integrating payment processing functions into its platform, the 700-person firm intends to substantially increase revenue. The company, which does not disclose its revenue, said in late 2017 that it handled $15-billion in gross merchandise volume annually booked by more than 50,000 customers. It has not updated the figures since.

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Founder and chief executive Dax Dasilva was unavailable on Tuesday. But during an interview at Lightspeed headquarters in November, he told The Globe and Mail he was excited about adding “something that’s high value” when the company rolls out payments this year. “Our customers want to work with one vendor, and what they expect from that vendor is for things to be seamless and integrated and for it to be better as a whole,” he said at the time. "I think the one-stop, all-in-one solution is why we’re successful. We need to make payments be the same level of value as all the other kinds of things we add to the mix as that single vendor.”

Lightspeed’s payments potential is expected to feature prominently when the underwriting team, co-led by Bank of Montreal and National Bank of Canada, markets the company’s initial public offering (IPO). Last November, The Globe reported the company intended to sell at least $200-million worth of stock and achieve a market valuation of $1-billion-plus in an offering targeted for spring. Those plans are still on track, with the company set to file its prospectus with securities regulators in February, according to sources familiar with the company’s plans who are not authorized to speak publicly.

Lightspeed has taken other steps recently to prepare for an IPO, including recruiting Brandon Nussey, former chief financial officer of publicly traded Descartes Systems Group, as its finance chief last year, and adding four directors to its board, including former Google CFO Patrick Pichette and former Open Text Corp. CFO Paul McFeeters.

Lightspeed is one of two high-profile potential IPOs in the Canadian tech sector expected this year, at a time when Silicon Valley giants including Uber Technologies Inc. and Palantir Technologies Inc. are also reported to be set to go out. 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 within the next six weeks. A syndicate of investment banks that includes Goldman Sachs Group Inc. and RBC Dominion Securities Inc. is advising on the so-called “dual-track” process.

The last notable Canadian tech IPO, by online mortgage services firm Real Matters Inc., in 2017, has not fared well for investors, while Mississauga’s PointClickCare Technologies Inc. delayed its IPO plans, raising private equity capital instead.

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