Montreal software company Lightspeed files for IPO

It’s the first notable tech IPO in Montreal since Stingray Digital went public in 2015.

A TSX tote board is pictured in Toronto. Frank Gunn / THE CANADIAN PRESS

Montreal-based software company Lightspeed’s plan to go public on the Toronto Stock Exchange is being hailed a success story for Montreal’s tech industry.

On Wednesday, the company, which makes cloud-based payments software aimed at small and medium-sized businesses, filed a prospectus with securities regulators — a major step in the initial public offering process.

It would be the first notable IPO by a Montreal technology company since Stingray Digital, now Stingray Group, went public in 2015.

“It’s really one of the great high tech success stories in Montreal,” said Karl Moore, a professor at McGill University’s Desautels Faculty of Management.

The listing could place Lightspeed among the most valuable technology companies in Canada. While the initial price of individual shares — and the number of shares that will be issued — has not yet been determined, it is believed that the company is seeking to raise around $200 million through the IPO at a valuation of around $1 billion.

That billion-dollar valuation, referred to as “unicorn” status in the tech industry, is rare.

“There’s Hootsuite, there’s Shopify and there’s Lightspeed,” said Mark Maclean, a senior director at Montreal International, an economic development agency that works to attract foreign direct investment to the city. “You can probably count on two hands the amount of unicorns we have in Canada.”

Lightspeed — which has been in business since 2005 — says it processed more than $13 billion in payments in the 2018 calendar year and had $71.9 million in revenue, according to the prospectus filed with securities regulators.

However, the company has lost money for at least the past three years.

In the company’s 2018 fiscal year, which ended on March 31, 2018, it had revenue of $57 million, up from $42.6 million the year before and $30.749 million in 2016, according to the prospectus.

But as revenue has increased, so have the company’s losses.

Lightspeed’s net loss was $96.179 million in 2018, $58.404 million in 2017 and $51.119 million in 2016.

However, the company says much of that loss was due to changes in the fair value of redeemable preferred shares — shares in the company that it has the right to buy back. Those shares will be converted into a different type of share before it goes public and, according to the prospectus, will no longer affect the company’s results.

The company recorded a loss of $59.985 million on changes in the fair value of redeemable preferred shares in 2018.

Its operating loss was $21.922 million in 2018, down from $34.002 million in 2017 and $31.941 million the year before.

“Lightspeed is among the few notable Canadian technology companies in recent years to tap public markets,” said Brian Pinchuk, a portfolio manager at Lorne Steinberg Wealth Management, a Montreal-based financial planning firm. “There is much to like about the company, which is quickly becoming Canada’s next great technology success story. But, like many software firms growing revenue at a healthy clip, they also generated significant losses, making it a challenge for investors to evaluate.”

The IPO is a sign that Montreal’s startup ecosystem is maturing, Maclean said.

“This is a really important piece to take Montreal to the next level. The point of founding startups, the point of building companies, isn’t to be running a debt, raising venture capital,” Maclean said. Instead the point is to sell the company or to to take it public.

For the startup ecosystem, and the city’s economy, an IPO is better, Maclean said. “That’s where you build value, that’s where you build wealth, that is the ultimate goal.”

Patrick Gagné, the CEO of the OSMO Foundation, a non-profit that works to support local startups, said the IPO is a sign that Montreal’s startup ecosystem is heading in the right direction.

“I think this is very positive news for everyone, not just in the startup ecosystem, but for Montreal as a whole economically,” he said.

IPOs like this will attract more talent, more innovators and more investors to Montreal, he said, building the ecosystem further.


Lightspeed says its software is used in 47,000 “customer locations” in 100 countries.

Thirty-five per cent of Lightspeed’s revenue comes from outside North America, it said in the prospectus, and it has subsidiaries in Delaware, Luxembourg, Belgium, the Netherlands and the United Kingdom.

Moore said the company has found a “great global niche.”

“They’re going after small and medium-sized enterprises, so it’s not competing with the big, big players, so it’s found a great niche,” he said.

Even after the IPO, the company’s current CEO, founder Dax Dasilva, will retain significant control, with the majority of voting shares.

The Caisse de dépôt et placement du Québec will also have significant influence over the company.

The Caisse owns 44.6 per cent of Lightspeed. The provincial pension fund manager has invested US$292 million in Lightspeed, or approximately $387.6 million Canadian.

“This is nice to see a Montreal company, which we have a bunch of, saying we’re not going to sell out to the Americans or whoever, but we’re going to go for it,” Moore said.

Lightspeed employs around 700 people.

BMO Capital Markets, National Bank Financial Inc. and J.P. Morgan Securities Canada Inc. are underwriting the IPO.

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