Montreal-based POS software firm, Lightspeed, has officially filed to go public on the Toronto Stock Exchange, filing the preliminary prospectus with Canadian securities regulators late Wednesday night.
The much-anticipated IPO has been in the works since 2017, and appears to be right on target with the company’s goals, as Dax Dasilva, founder and CEO of Lightspeed, told BetaKit that Lightspeed hoped to file its IPO in early 2019.
Lightspeed intends to raise $200 million in stocks and hopes to achieve a market valuation of more than $1 billion.
Lightspeed now marks just a small group of Canadian tech companies to jump into the public markets, including Shopify, Mitel Networks Corp., and Constellation Software Inc. According to The Globe and Mail, Lightspeed intends to raise $200 million in stocks and hopes to achieve a market valuation of more than $1 billion. The expected price and number of shares, however, were not specified in the prospectus filing obtained by BetaKit. Leading Lightspeed’s underwriting team are BMO Nesbitt Burns Inc., National Bank Financial Inc., and J.P. Morgan Securities Canada Inc.
The company, which develops cloud-based POS and e-commerce software for SMBs appears to have been slowly preparing for this IPO over the past couple of years. It added former Google and OpenText CFOs Patrick Pichette and Paul McFeeters to its board of directors in November, and appointed Brandon Nussey as its new CFO in April 2018. The company also hired a new CTO, John Vandermay, in late November. It also closed a Series D funding round in late 2017 of $207 million, which Lightspeed used to help grow its international presence.
Through its prospectus filing we have learned that Lightspeed pulled in $72 million USD in revenue over the past year. Its revenue for its most recent quarter ending December 31, is listed as $20 million USD, which shows 33 percent growth from the same time last year. However, it also posted a net loss of $96 million USD in the fiscal year ending in March 2018, which includes a $60 million pre-tax redeemable preferred shares charge (not relating to operations), and operating losses of $21.9 million. The company has still shown growth, however, with a compound revenue growth rate (CAGR) of 36 percent.
“We still have work to do in the Canadian public markets before they are truly a warm and receptive place for tech companies.”
Lightspeed currently operates in more than 100 countries with eight offices spanning Canada, the US, Europe, and Australia. In its filing, it stated that it currently has 47,000 plus customer locations and a gross transaction volume of $13 billion plus. In 2017, however, Lightspeed reported more than $15 billion USD in transactions as well as more than 50,000 customers. The Globe and Mail, which first reported on the story, reached out to Lightspeed for clarification on the gaff in numbers, but was referred back to the prospectus.
As one of the first Canadian tech firms to file for an IPO since cloud software company Dye & Durham Corp. pulled an offering last year, the Canadian tech scene is likely to be excited about the public offering. Mark MacLeod, founder of SurePath Capital Partners and former CFO for Freshbooks, tweeted that it is great to see another Canadian tech IPO and highlighted some of the key takeaways from the filing.
Highlights: 2018 revenue: $ 72M
Q4 ‘18 revenue: $20M
$98M in losses last fiscal year https://t.co/hwOQAP7Rdn
— Mark MacLeod (@markmacleod_) February 7, 2019
“I have been waiting for this for some time,” MacLeod told BetaKit, noting that it is exciting to see a company like Lightspeed go public from SurePath’s perspective as an investment bank for new SMBs. “When I look at any company, I first look at its founder. Dax is mission-driven, he has been doing this for 14 years and is clearly passionate. The fact that he is pushing a dual-share structure giving him voting control is evidence that he plans to do this for a long time to come.”
“Lightspeed competes in a highly competitive market.”
Despite his general enthusiasm MacLeod also expressed a few concerns about the IPO. “Lightspeed competes in a highly competitive market. Their core verticals of retail and restaurants are crowded with large, highly funded competitors,” he said, pointing out fellow Canadian companies like Shopify and TouchBistro, which also operate in similar verticals.
He also expressed concern over Lightspeed’s financials. “They have built a great business, but their revenue scale and losses, coupled with the fact that this is a Canada-only IPO could lead to weak trading volume and demand. We still have work to do in the Canadian public markets before they are truly a warm and receptive place for tech companies.” MacLeod noted however that Lightspeed is helping to blaze a trail for future Canadian tech companies.
Lightspeed recently launched a new integrated payments system last month, which is expected to be a top feature as the company’s underwriting team markets the IPO over the next couple weeks. The Montreal company intends to list under the symbol ‘LSPD.’
This story has been updated with an interview from Mark MacLeod, founder of SurePath Capital Partners, as well as to reflect that the net loss is related to Redeemable Preferred Shares.