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Summary
- Canada fell two spots behind Slovenia to rank 22nd in the 2020 Bloomberg Innovation Index.
- Over 130 tech heads wrote to PM Trudeau demanding supportive ecosystem to nurture innovation and commercialization of ideas.
- Shopify’s stock (TSX:SHOP) is up 175% this year.
- Lightspeed POS (TSX:LSPD) and Constellation Software (TSX:CSU) stocks gained 27.39% and 12.59% YTD, respectively.
Pushing for Canada’s transition to knowledge-based economy, over 130 tech heads wrote to the federal government demanding supportive ecosystems to nurture innovation and commercialization of ideas. This will aid in economic recovery amid pandemic and fuel job creation, said the tech CEOs in an open letter on Tuesday.
The tech community says, a lot of patchwork pilot programs have been rolled out by the government, but no concrete prosperity plan for revival of the tech sector is in place. They have called out to the Prime Minister Justin Trudeau demanding the need for a bold, cohesive plan for fostering innovation in Canada.
This call for action comes after the nation fell two spots behind Slovenia to rank 22nd in the 2020 Bloomberg Innovation Index.
While the tech community is anxious to rebuild Canada soon, and ensure that the tech gains made during the pandemic times does not slip away, the government seems to be observing a lackadaisical approach to recovery.
In these moments of inflection, here are three technology stocks upholding the mantle strong amidst the gloom that surrounds - Shopify Inc. (TSX:SHOP), Lightspeed POS Inc. (TSX:LSPD), and Constellation Software Inc. (TSX:CSU).
Shopify Inc. (TSX:SHOP)
Current Stock Price: C$1,420.68
Think big tech in Canada, and Shopify Inc, the largest e-commerce platform in the country, cannot go unnoticed. The firm has been catering to two main segments primarily – the subscription solutions business and merchant solutions. The company will be releasing its third quarter results (for period ended September 30) on October 29.
This red-hot stock has gained 175 per cent this year. The company has a current market capitalization of C$156.33 billion. The stock holds profit-to-book (P/B) ratio of 28.442 and profit-to-cash flow (P/CF) ratio of 1,190.70.
SHOP FINANCIALS
In the second quarter of 2020 (period ended June 30), Shopify’s Gross Merchandise Volume (GMV) grew 119 per cent. Total revenue increased by 97 per cent year-over-year (YoY) to US$714.3 million while gross profit grew 83 per cent to US$375 million in Q2 2020.
The subscription revenue increased by 28 per cent YoY to US$196.4 million in Q2 2020 as compared to US$153 million in Q2 2019. Merchant solutions revenue was up 148 per cent from US$208.9 million in Q2 2019 to US$517.9 million in Q2 2020 driven by GMV growth.
Lightspeed POS Inc. (TSX:LSPD)
Current Stock Price: C$45.95
Lightspeed POS Inc is a software as a service (SaaS)-based omnichannel commerce platform operating in the markets of North America, Europe, Australia, and other countries. The company will be announcing its Q2 2021 financial results on November 5.
The stock gained 27.39 per cent YTD, and the current market capitalisation stands at C$4.13 billion. The stock hold profit-to-book ratio of 10.863.
LSPD FINANCIALS
As per the financial results for first quarter of fiscal year 2021 (for the period ended June 30, 2020), the company’s total revenues increased by 51 per cent YoY to US$36.2 million as compared to US$24.06 million same quarter last year. Its recurring software and payments revenue grew by 57 per cent YoY to US$33.4 million.
The net loss widened to US$20.1 million in Q1 FY21, as compared to a net loss of US$9.1 million a year ago. The gross profit was US$21.61 million, up by 39 per cent from prior year quarter of US$15.54 million. Unrestricted cash and cash equivalents of the company stood at US$203.5 million towards the end of the period.
Constellation Software Inc. (TSX:CSU)
Current Stock Price: C$1420.05
Canada-based Constellation Software Inc. builds, designs and develops customised software solutions for both private and public sector markets across industry verticals. The company completed a series of acquisitions this year for an aggregate cash consideration of US$67 million and deferred payments valued at US$17 million, to make for a total consideration of US$ 84 million.
The stock gained 12.59 per cent YTD, starting from C$1,261.16 at the beginning of the year. The firm has a current market capitalisation of C$30.09 billion. Earnings per share (EPS) is C$21.28. The stock holds profit-to-equity (P/E) ratio of 68.00, profit-to-book (P/B) ratio of 28.822 and profit-to-cash flow (P/CF) ratio of 22.60. The company paid quarterly dividend of US$1 per share and currently yields 0.377 per cent.
CSU FINANCIALS
Financial results for the second quarter (period ended June 30, 2020), the company reports 9 per cent revenue growth to US$922 million as compared to US$846 million in Q2 2019. The net income increased by 12 per cent to US$83 million from US$73 million in Q2 2019. Cash flow from operations increased by 370 per cent at US$237 million, from US$50 million in Q2 2019.
Free cash flow available to shareholders in Q2 2020 stood at US$190 million, an increase by US$178 million, as compared to US$12 million in the same period last year.
