IPO | “Coveo is a pre-authorized payment machine”

There are reasons why Coveo received more than $ 1 billion in orders from potential investors during the process that led to the listing on the stock exchange of the Quebec-based company specializing in artificial intelligence applied to commerce. online, argues its chief executive.


Posted on November 24, 2021 at 3:26 p.m.


Updated at 8:14 p.m.

Richard Dufour

Richard Dufour
Press

“It’s because investors saw that it’s a company that has a lot of growth options, that generates very high margins and very predictable income,” said CEO Louis Têtu in an interview.

If Coveo’s gross margin is indeed between 75% and 80%, the nature of the revenues is a key element underlined by Louis Têtu. “It’s a recurring income machine. Coveo is a pre-authorized payment machine, ”he says.

We have several growth levers. We have four lines of business (website, e-commerce, customer service and support, and workplace). We can add solutions to the platform and we can expand geographically.

Louis Têtu

Now that Coveo’s stock has been on the stock market since last Thursday, management can consider using its stock as currency to complete transactions.

The company has only completed two so far since it was founded about 15 years ago.

Last month, Louis Têtu said again that the Stock Exchange was not a destination and he still believes in it. He also said last month in an interview with Press that the shareholders of Coveo were not “in a hurry”, but he explains today that the “timing” was good to make the leap to the stock market and “to pursue a strategy of acquisitions and investment in growth”.

“We were ready to lift the switch on 30 days notice, and that’s what we did,” he says.

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“The conditions were aligned. We would have been okay if they hadn’t been. We could go on. But the opportunity arose, and we seized it. “

PHOTO PROVIDED BY TMX GROUP

Jean Lavigueur, chief financial officer, Louis Têtu, chief executive officer, and Laurent Simoneau, cofounder of Coveo and president and chief technology officer, rang the bell when the markets opened on Wednesday morning in Toronto.

The initial share price was set at $ 15 after a series of 100% virtual presentations spread over ten days for a hundred investors.

“It was quite special compared to our old life where we had to rent a plane and cars to get from one place to another. There, it happened only on camera. “

Before his roadshow virtual, Coveo management had nevertheless met with certain investors to test the market to see if its message received a favorable reception.

Excluding shareholders already present and who reinvested in the company as part of the initial public offering, the shares distributed last week by Coveo went to Canadians in a proportion of 60% while 40% of ‘between them were granted to Americans, underlines the chief financial officer, Jean Lavigueur.

If the title quickly appreciated from the start of transactions in its first trading session, it has since fallen back. “The market in our sector has fallen 5% since the IPO last week. We followed the tide in the same way that we would not take credit if the market had taken the opposite course, ”comments Louis Têtu.

He believes that the real judgment will begin with the publication of the first financial results as a public company. Coveo is expected to present them towards the end of January.

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Coveo stock ended Wednesday’s session up 1.7% to $ 15.30 in Toronto.

The principal shareholders of Coveo are its directors, the Fonds de solidarité FTQ, Investissement Québec, OMERS (the pension fund for municipal employees in Ontario), as well as the Evergreen funds (a subsidiary of Elliott Management) and QIA (Qatar Investment Authority).

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