‘Ottawa’ Earnings snapshot: Sweet Wednesday for Ottawa tech stars
The region’s most valuable tech firms continued to impress Wednesday as earnings season got into full swing.
- E-commerce software specialist Shopify revealed revenues in the first quarter nearly doubled year over year to $72.2 million – about $5 million better than expected. (Shopify reports in U.S. currency.) The company also revised upwards its revenue forecast for the year as a whole to at least $337 million and as much as $347 million. Analysts tracked by Thomson Reuters had been predicting $328 million.
- Calian Group, a specialist in staffing and professional services, reported revenues of $68.1 million for its second fiscal quarter ending March 31 – a 12 per cent jump year over year. Earnings climbed an impressive 50 per cent over the same period to reach $3.3 million. (Calian reports in Canadian dollars.)
- Kinaxis, a high-tech pioneer in Ottawa, recorded a 37 per cent year over year jump in first quarter revenues to $27 million, along with a 44 per cent surge in adjusted earnings to $8 million. (Kinaxis reports in U.S. dollars.) Kinaxis specializes in software that helps corporations run complex chains of suppliers. John Sicard, the CEO since Jan. 1, reported that during the quarter Kinaxis registered “growth across all fundamentals of our business.”
The three companies occupy dissimilar tech niches and are at various stages of development. Not surprisingly, investors viewed their quarterly financial results with wildly different expectations.
Despite Shopify’s torrid sales growth, for instance, the company’s share value slipped nearly four per cent Wednesday to close at $29.61 U.S. on the Nasdaq stock market. In Toronto, the decline was more graceful as shares closed at $38.19 on the TSX, down 2.6 per cent on the day.
The sore point for investors appeared to be the company’s revised forecast for its operating loss for 2016 – to a range of $41 million to $47 million from a previous range of $36 million to $42 million. The company said stock-related compensation expenses and payroll taxes are growing faster than expected – which reflects Shopify’s hiring boom.
The head count for the firm topped 1,200 as of March 31 compared to 1,048 at the end of December. While Shopify is hiring aggressively in Montreal, Waterloo and Toronto, a majority of the workforce continues to be based at company headquarters in Ottawa.
Typical of young tech firms eager to build market share, Shopify is investing heavily in staff and infrastructure. Part of the reason it went public last year was to raise money to allow it to do this. It’s a tricky balancing act because expanding too aggressively risks triggering losses so large they can weaken the firm. But a too-cautious approach could allow competitors to seize potential customers.
Shopify develops software that online merchants use to set up and run their electronic storefronts. The company as of March 31 claimed 275,000 merchants globally were using its products – up 32,000 during the first quarter.
Shopify has no money worries at the moment: cash on hand as of March 31 was $189.5 million, down marginally from Dec. 31.
At Calian, which published its financials before the stock markets closed Wednesday, shares moved ahead 3.3 per cent on the day – to close at $19.67 on the TSX. The company held its quarterly dividend steady but at 28 cents per share it still represents a healthy 5.7 per cent yield – giving investors a good reason to hold the stock.
Kinaxis did not report its results until after 4 p.m. Wednesday. But since the Kanata firm delivered better-than-expected revenues and earnings its share price should do well Thursday compared to the rest of the stock market. Unlike the case with Shopify, the more mature Kinaxis is not expected to deliver blowout growth, merely record steady progress.