Market watch: Nuvei, VerticalScope, Magnet Forensics

A trio of Toronto Stock Exchange (TSX)-listed Canadian tech companies—Nuvei, VerticalScope, and Magnet Forensics—released their fourth quarter and full year 2021 earnings reports this week.

Montréal-based payment processing firm Nuvei posted strong Q4 and 2021 financials. Meanwhile, acquisition-focused Toronto software company VerticalScope and Kitchener-Waterloo-based digital investigation business Magnet Forensics recorded some positive but mixed results.

Nuvei notes revenue growth of 83% in Q4, 93% in 2021

Nuvei (TSX: NVEI) shared robust financial results in its latest earnings report, as the company’s revenue and net income increased in the fourth quarter and 2021. The report represents Nuvei’s first since the firm was hit by a short-seller report late last year.

In Q4, Nuvei’s revenue rose 83 percent year-over-year (YoY) to $211.9 million USD, from $115.9 million in 2020. This rise came after the company saw major revenue growth in Europe, the Middle East and Africa—its largest geographic region by revenue—and Latin America as well as more modest growth in North America and a decline in the Asia-Pacific region.

At the same time, Nuvei’s net income in Q4 dropped to $12.3 million from $22.6 million. The company attributed this fall to a $29.7 million increase in share-based payments to employees who joined Nuvei as part of acquisitions completed last year—which include Simplex and Mazooma—and other employee incentive grants.

In 2021 as a whole, Nuvei’s revenue jumped 93 percent YoY to $724.5 million, from $376.2 million in 2020. This increase was driven by significant organic growth, and was coupled by an associated rise in Nuvei’s net income, which skyrocketed by $210.7 million to $107 million, following a previous net loss of $103.7 million.

VerticalScope “ahead of schedule” in deploying IPO capital

In the company’s latest earnings report, VerticalScope founder and CEO Rob Laidlaw said the Toronto firm is “ahead of schedule” in its deployment of its initial public offering (IPO) proceeds.

In 2021, VerticalScope completed 21 acquisitions, for a total cash consideration of $82.5 million USD. The company went public on the TSX in June 2021, raising $143.8 million CAD in gross proceeds to support its merger and acquisition (M&A)-based growth strategy.

VerticalScope posted Q4 revenue of $21.4 million USD, an increase of six percent YoY. Last year, the company’s revenue rose 16 percent compared to 2020, as it drew in $65.8 million. VerticalScope said these results were fuelled by digital advertising revenue growth, which the company said came despite “ongoing challenges related to global supply chain disruptions and inventory shortages experienced by several customers, particularly in the automotive and powersports categories.”

At the same time, VerticalScope saw its e-commerce revenue drop during both Q4 and 2021 overall due to these same factors—following results in prior periods that the company said were elevated by a pandemic-fuelled increase in online shopping.

VerticalScope did not share its net income, but the company did note that it experienced a total comprehensive loss of $12.4 million in 2021, compared to $1.5 million year prior, attributing this rise to incremental costs of $15.9 million related to its IPO, amended credit agreement, and acquisitions, among other factors.

Magnet Forensics sees revenue rise, net income fall

Magnet Forensics (TSX: MAGT), which provides digital investigation software to public and private sector organizations, saw its revenue increase 37 percent YoY in Q4, following its TSX IPO early last year.

The company attributed this rise to an increase in term license revenue and software maintenance and support revenue within its existing customer base, which was offset partly by decline in perpetual license revenue. Transitioning to a “greater proportion” of term license revenue is part of Magnet’s strategy to boost the amount of term license contracts it has under its belt.

This revenue increase was coupled with net income of $800,000 in Q4, a decrease of 82 percent compared to the same period in 2020. Magnet attributed this drop to increased investments in research and development (R&D) and sales and marketing.

Magnet’s Q4 revenue results mirrored the 37 percent YoY revenue increase the company reported in its full-year 2021 earnings, as the firm generated total revenue of $70.3 million. On the year, Magnet recorded net income of $7.3 million, a 31 percent drop compared to 2020.

Photo of Philip Fayer from Nuvei.

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Author: wpadmin

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