Judi Hess, CEO of Copperleaf, is photographed at the company's offices in Vancouver, Friday, October 25, 2019.Rafal Gerszak/The Globe and Mail
Vancouver decision-analytics software maker Copperleaf Technologies Inc. filed Thursday to go public on the Toronto Stock Exchange, ending a summer break for new Canadian technology issues after a record run on the country’s senior exchange.
The 350-person company sells artificial intelligence-powered optimization software to large companies with extensive physical assets including energy and water utilities and transportation infrastructure giants. Copperleaf’s clientele, including B.C. Hydro, Duke Energy and Enbridge, use its products to analyze, plan and budget how to spend capital budgets over multiyear periods, with an eye toward minimizing business risks. Copperleaf says its software manages decisions on $2.3-trillion worth of infrastructure in 24 countries.
While the company faces a fragmented market of competitors, it says in its prospectus “typically the incumbent solution used by our prospects is a homegrown Excel-based solution that cracks under the burden of decision-making at scale, let alone attempting to align decisions from across the business.”
Copperleaf claims it has never lost a customer, and those companies spend more with Copperleaf every year. Net revenue from existing customers increased by 25 per cent year-over-year in the 12 months ended June 30.
“Every organization that has implemented our software continues to use it today,” chief executive officer Judi Hess, one of the few women to run a large-scale Canadian software company, states in the prospectus. “We are supporting some of the world’s largest and most complex organizations with their decisions, but we know there is so much more we can do.”
Ms. Hess said Copperleaf can extend its offering to new sectors, and operates in a market with potential revenue exceeding $12-billion.
Copperleaf was profitable in 2018 but has dipped into the red since then as it ramped up spending to fuel its growth and transform its business model to sell its software by subscription. Copperleaf lost $3.4-million in the first six months of this year, compared to a loss of $8.4-million in the same period a year earlier. Revenue in the first six months of $30.7-million was up 78 per cent. Revenue was $44.5-million in 2020 and $36.9-million in 2019. The company has 62 clients, up from 39 at the end of 2019.
The offering is the first Canadian tech IPO on the TSX since Lifespeak raised $125-million in early July. That initial-public-offering deal capped off a torrid year-long stretch in which 14 tech companies went public on the TSX. By comparison, there were 12 IPOs over the 11 years ended December, 2019.
Investor reception for Copperleaf will be closely watched to gauge continued interest in new Canadian tech stocks. Other companies, including online education company D2L Corp., are nearing decisions on whether to go public this fall.
Copperleaf was founded in 2000 as a consultancy to help electricity generators make financial decisions. Toward the end of the decade the company began to develop software and hired Ms. Hess, who previously served as president of Creo Inc. and subsequently as vice-president with Eastman Kodak after it bought the Vancouver software pioneer for US$1-billion in 2005. Copperleaf’s top ranks are dominated by senior Creo alumni, including chairman Amos Michelson and its chief financial, technology and marketing officers.
The company previously raised little outside capital, including a $7.3-million equity financing in 2010 backed by Working Opportunity Fund and Export Development Canada, and a US$10-million share sale in 2019 to client National Grid Partners Ltd. Mr. Michelson, PenderFund Capital Management and EDC each own at least 10 per cent of the stock.
Copperleaf hasn’t disclosed how much it hopes to raise but a source familiar with the matter said it will aim for roughly $150-million. The Globe and Mail is not identifying the source because they are not authorized to speak on the matter.
The Globe first reported Wednesday about Copperleaf’s impending IPO. The deal is being led by Bank of America’s Merrill Lynch unit and Bank of Montreal. Other underwriters include CIBC World Markets, RBC Dominion Securities, Canaccord Genuity and Cormark Securities.
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