The Hottest Technology Companies in Canada - June 06, 2013
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Institutional Equity Research Industry Update June 06, 2013 Technology Hardware Sector Weighting: Market Weight The Hottest Technology Companies In Canada 30 Public And Private Companies Investors Need To Know All figures in Canadian dollars, unless otherwise stated. 13-123437 © 2013 CIBC World Markets does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making their investment decision. See "Important Disclosures" section at the end of this report for important Todd Coupland, CFA Robin Manson-Hing required disclosures, including potential conflicts of interest. 1 (416) 956-6025 1 (416) 594-7232 See "Price Target Calculation" and "Key Risks to Price Target" sections at the [email protected] [email protected] end of this report, or at the end of each section hereof, where applicable. Find CIBC research on Bloomberg, Reuters, firstcall.com and ResearchCentral.cibcwm.com CIBC World Markets Inc., P.O. Box 500, 161 Bay Street, Brookfield Place, Toronto, Canada M5J 2S8 (416) 594-7000 The Hottest Technology Companies In Canada - June 06, 2013 Table of Contents Tech's Time Is Now ....................................................................................... 3 New Information On New Companies .......................................................... 3 The Timing Is Right For Tech ......................................................................... 5 Canadian Innovators Thriving ..................................................................... 7 Talent Remains But Double Whammy Hurt.................................................. 8 M&A Continuing And Venture Capital Growing ............................................10 Government Has Not Helped In The Last Two Years ...................................12 Venture Capital Already Rebounding ..........................................................13 Canadian Companies Ready To Take The Next Step ...................................14 Company Profiles Absolute Software Corporation .....................................................................16 Accedian Networks Inc. ................................................................................17 Avigilon Corporation .....................................................................................18 Awesense Wireless Inc. ................................................................................19 Chango Inc. .................................................................................................20 Creation Technologies LP ..............................................................................21 Desire2Learn Incorporated ...........................................................................22 EnWave Corporation.....................................................................................23 Global Relay Communications Inc. ................................................................24 Halogen Software Inc. ..................................................................................26 HootSuite Media Inc. ....................................................................................27 Keek Inc. .....................................................................................................28 Kik Interactive, Inc.......................................................................................29 Kinaxis Inc. ..................................................................................................30 MOSAID Technologies Inc.............................................................................31 Nanotech Security Corp. ...............................................................................32 PointClickCare.com.......................................................................................33 Real Matters Inc. ..........................................................................................34 Redknee Solutions Inc. .................................................................................35 SkyWave Mobile Communications Inc. ..........................................................37 Solace Systems Inc. .....................................................................................38 Spectra7 Microsystems Inc. ..........................................................................39 tucows Inc. ..................................................................................................40 Vision Critical Communications Inc. ..............................................................41 ViXS Systems Inc. ........................................................................................42 Wattpad .......................................................................................................43 Webtech Wireless Inc. ..................................................................................44 E-commerce In Canada ...................................................................................45 Thank You Canada Customs ......................................................................45 Little Brother Ignored Again ......................................................................45 Profitability Takes Time .............................................................................45 Company Profiles Beyond the Rack Inc. ...................................................................................47 Buyers Unite Inc./TeamBuy.ca......................................................................48 Well.ca Inc. ..................................................................................................49 2 The Hottest Technology Companies In Canada - June 06, 2013 Tech’s Time Is Now The recent lull in Canadian technology investment post the 2008 downturn and Nortel Networks (NRTLQ–PN) and Research In Motion (BBRY–SO-Spec.) fallout has prompted many firms to take a more entrepreneurial route. One example is the 200 companies that now occupy 2 million square feet of real estate owned by Terry Matthews in Kanata. Ten years ago the number of companies was 20, with little growth. Downriver, the old Nortel buildings at Technoparc in Montreal are being occupied by tenants like Accedian Networks and other up-and-coming IT firms, along with aerospace and U.S. subsidiary tenants that are able to operate and take advantage of the large talent pool in now-affordable real estate. The resource sector’s current negative cycle is being timed almost perfectly with: Increasingly driven and creative technology entrepreneurs; An experienced pool of talent; A growing number of engineering/computer science graduates; An increased venture capital and government funding focus; Reasonable valuations; and, A lower Canadian dollar. Most importantly, there are dozens of Canadian technology companies with material revenue bursting at the seams, many of which are showing rapid profitable growth. The story at the end of the day is one of Canadian entrepreneurs, their teams, and their ability to outperform their global, and often much larger, peers in the markets in which they compete. New Information On New Companies This report highlights 30 of the fastest-growing private and/or under-covered small-cap public technology companies in Canada. Exhibit 1 lists the profiled companies and their industry sub-group. Collectively, the (mostly profitable) private companies profiled within this report generated close to $2 billion in revenue in 2012, and virtually all of the private companies in this paper could go public if they so chose to over the next few years. These companies employ an estimated 10,500 people, the vast majority of whom are highly skilled, creative and flexible workers. These are the same types of employees that governments state are necessary for improved productivity of the labor force. In each profile, we provide company sales and growth estimates, headcount, detailed market sizing, growth and description along with details on the company’s product/service and competitive advantages, customers and business plans with strategic, current and target profit objectives. 3 The Hottest Technology Companies In Canada - June 06, 2013 Exhibit 1. Companies Profiled Company Status City Industry Absolute Software Corporation ABT–TSX Vancouver Mobile Device Management Accedian Networks Inc. Private Montreal Wireless Backhaul Service Assurance Avigilon Corporation AVO–TSX Vancouver Video Surveillance Market Awesense Wireless Inc. Private Vancouver Electricity Anti-theft Beyond The Rack Inc. Private Montreal E-Commerce Chango Inc. Private Toronto Real-time Bidding Creation Technologies LP Private Vancouver Mid-market EMS Desire2Learn Incorporated Private Kitchener/Waterloo Learning Management Systems EnWave Corporation ENW–TSX-V Vancouver Radiant Energy Vacuum For Consumption Global Relay Communications Inc. Private Vancouver RDBMS Software Halogen Software Inc. HGN–TSX Ottaw a Talent Management Software HootSuite Media Inc. Private Vancouver Social Media Ad Market Keek Inc. Private Toronto Social Media Ad Market Kik Interactive, Inc. Private Kitchener/Waterloo Mobile Ott Messengers Kinaxis Inc. Private Ottaw a Cloud Based SCM MOSAID Technologies Inc. Private Ottaw a Semiconductor IP Market Nanotech Security Corp. NTS–TSX-V Surrey, BC Anti-counterfeiting Security Feature PointClickCare.com Private Mississauga, ON SAAS For Skilled Nursing Real