Coveo makes strong debut on the Toronto Stock Exchange

Coveo made its Toronto Stock Exchange debut on November 18, with its share price quickly rising from its confirmed pricing of $15 per share to $16.20 in the early evening.

The artificial intelligence (AI), retail tech company offered 14,340,000 shares for gross proceeds of $215 million CAD. Its debut has become a bright light in what has been a lackluster season for tech IPOs, with many falling short of expectations.

The offering was made through a syndicate of underwriters led by BMO Capital Markets, BofA Securities, RBC Capital Markets and UBS Investment Bank, as joint bookrunners, and Canaccord Genuity Corp., Oppenheimer & Co. Inc., National Bank Financial Inc., Scotiabank, TD Securities Inc. and Ramirez & Co., Inc.

Coveo also offered an over-allotment option to purchase up to an additional 2,151,000 shares at the offering price. If exercised in full, the over-allotment would bring in gross proceeds of $247.3 million. The over-allotment is open for a period of 30 days following the IPO.

Other, recent IPOs haven’t met with nearly the success of Coveo. Kitchener-Waterloo-based EdTech company D2L began trading on November 3, generating $150 million in gross proceeds from its IPO, roughly $50 million less than it originally anticipated from the offering.

RELATED: Coveo latest Canadian tech company to file for TSX IPO

Ahead of its TSX listing, D2L reduced the size and pricing of its IPO, originally planning to sell about 9.5 million to 10.5 million shares within the $19 to $21 price range for each one, for about $200 million in potential gross proceeds.

In early November, Montréal-based Sharethrough postponed its IPO on the Toronto Stock Exchange. The ad exchange company first filed its prospectus in October with an offering that consists of between 3.9 million and 5 million common shares priced within the range of $15 and $19. If the over-allotment option was exercised in full, Sharethrough had the opportunity to collect about $86.25 million CAD in gross proceeds.

JF Cote, co-founder and CEO of Sharethrough, told BetaKit at the time that the decision came from “adverse and challenging current market conditions, especially for technology companies.”

When Toronto-based investor relations software firm Q4 finally made its TSX debut on October 25. It was following a process that began in May and was put on hold due to a contract renegotiation before it was resumed earlier this month. It’s a saga that saw the company reduce its IPO target after seeing lower than expected demand from investors, and experience a disappointing day one performance.

Coveo seems to have sidestepped the IPO troubles dogging other tech startups.

Launched in August 2004 under the name Copernic Business Solutions Inc., Coveo initially offered SaaS solutions in the advanced search engines market. In October of the same year, the company officially changed its name to Coveo.

Leveraging AI and machine learning, Coveo is a provider of e-commerce products that use data to create personalized experiences for the consumer. Its Coveo Relevance Cloud product is an AI-powered platform that aggregates data from digital interactions and uses AI to embed relevant content into a user’s search results, recommendations, and personalization.

RELATED: Coveo raises $227 million CAD to pursue “aggressive” growth in AI e-commerce market

Coveo claims a global customer base of more than 475, with most coming from North America.

Coveo noted in its prospectus that its business experienced significant growth this year. For its fiscal year ending in March, it generated $64.9 million in revenue. By September, that number climbed to $71.9 million.

The company has raised around $446 million to date; most recently securing $227 million in 2019 led by OMERS Growth Equity. A spokesperson for Coveo told BetaKit more recently that $150 million of that round was primary capital. The later stage investment round included around $55 million in secondary financing and $22 million in debt.

Coveo’s list of investors includes its CEO Têtu, Evergreen Coast Capital, Fonds de solidarité FTQ, Investissement Québec (IQ), BDC Venture Capital, Tandem Expansion and Propulsion Ventures.

Têtu has been with Coveo as chairman and CEO since 2008, he was behind software company Taleo, which was acquired by Oracle almost a decade ago for $1.9 billion USD.

Charles Mandel

Charles Mandel

Charles Mandel's reporting and writing on technology has appeared in Wired.com, Canadian Business, Report on Business Magazine, Canada's National Observer, The Globe and Mail, and the National Post, among many others. He lives off-grid in Nova Scotia.