The Coveo IPO: Making Some Headway

December 9, 2021

A number of Canadian tech companies have recently gone public on the Toronto Stock Exchange only to be met with muted responses. One was enterprise search firm Coveo, which went public in November in order to position itself globally, attract talent, and fund future acquisitions. CEO Louis Têtu appears unconcerned about the apparent indifference to his and other companies’ fledgling stock, The Globe and Mail reports in its piece, “Coveo CEO Dismisses Soft Trading Start on TSX as Quebec Software Company Closes $215-Million IPO.” Writer Sean Silcoff tells us:

“Coveo received more than $1-billion in orders for its IPO… . The stock hit $18 on its first day of trading last Thursday, but has since retreated, briefly trading below the issue price Tuesday. That makes it the fourth new tech issue this autumn – following D2L Corp., Q4 Inc. and E Automotive Inc. – to trade below its issue price. Coveo stock closed Wednesday at $15.30, up 1.7 per cent. Mr. Têtu dismissed Coveo’s ho-hum start as a public company, noting the share price of New York Stock Exchange-listed rival Elastic NV had dropped by 15 per cent over the previous four sessions. ‘There is a set of market dynamics we don’t control; the tide raises and lowers all boats,’ he said. ‘I think the jury is going to be out until the first earnings call [as a public company] and the subsequent earnings call. I think anybody who understands the stock market and IPOs … wouldn’t draw conclusions’ from the stock’s early performance. Coveo became the 20th Canadian tech IPO on the TSX to raise $50-million or more since July, 2020. By contrast, there were 12 such IPOs in the 11 years ended December, 2019.”

I suppose that is a good point—progress is progress, even if it is not at light speed. The write-up [paywalled] includes a few more details about Coveo’s growth and profits. Since its founding in 2005, the company has acquired two AI-powered e-commerce firms: Tooso in 2019 and Qubit in 2021. It sounds like Coveo may have some more companies already in its sights.

The good news is that the stock on December 8, 2021, was trending up. Search and retrieval is a tough business. Just ask the former CEOs of Autonomy and Fast Search & Transfer or take a look at the dust up between Amazon and Elastic. Worth monitoring. Maybe take a stake?

Cynthia Murrell December 10, 2021

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