A number of publicly-traded Canadian technology companies have recently made meaningful progress on their plans to reach profitability, and investors have been reacting positively.
Amid a prolonged period of high inflation, rising interest rates, and economic uncertainty, tech stocks have fallen and capital has become scarce. These conditions have led investors to call on fast-growing firms to focus less on growth and more on profits. Canadian firms have reacted by refocusing their businesses, reducing expenses, and charting paths to profitability.
These earnings reports offer insight into how some Canadian tech firms are working to meet investor expectations.
This week, at least four Toronto Stock Exchange-listed firms announced their financial results: Vancouver software company Thinkific Labs, Québec City-based artificial intelligence platform Coveo, Vancouver FinTech firm Mogo, and Montréal-based payments company Nuvei. Their earnings reports offer insight into how some Canadian tech companies are working to meet investor expectations.
During the third quarter, Thinkific’s push to cut costs started to pay off earlier than expected as the company posted positive adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA)—a metric that Montréal-based Lightspeed Commerce also recently hit after shedding staff earlier this year. As of time of publication, investors have responded positively to these results.
Like Thinkific and Lightspeed, Coveo’s most recent earnings report indicates that the company made progress toward profitability by reducing its operating and net losses on a year-over-year basis in fiscal Q2. However, Coveo’s stock price has also fallen slightly as the firm lowered its sales outlook for the coming quarter.
Meanwhile, Mogo reduced its operating expenses, recorded positive adjusted EBITDA, and shrunk its net loss during Q3 relative to the same period in 2022. This came after the firm narrowed its focus and exited certain “sub-scale and unprofitable products.” Mogo also reiterated its existing adjusted EBITDA forecasts. But like Coveo, Mogo’s shares have dipped a bit since the release of its latest earnings report.
Unlike the other companies mentioned, Nuvei actually saw its net loss increase in the third quarter, yet its stock still rose after the company posted strong, 55 percent year-over-year revenue growth and upped its outlook for the remainder of the year.
Ottawa-based e-commerce giant Shopify, which laid off employees and sold its logistics business this year, also saw its shares surge last week after it posted a sizeable profit in Q3.
Many other Canadian tech firms, including Toronto investor relations software company Q4 Inc. and Kitchener-Waterloo edtech firm D2L have also cut costs and shrunk their losses in pursuit of profitability.
As The Globe and Mail reports, striking the right balance between growth and profits can be challenging, and staying in the black while also revving up growth could prove especially tough.
Feature image courtesy Thinkific.