Despite stock drop since IPO, CEO optimistic about organic growth, M&A opportunities.
Toronto-based investor relations (IR) software company Q4 Inc. saw continued revenue growth and increased losses in its 2021 fourth quarter and full-year earnings report.
The report covers what Q4 founder and CEO Darrell Heaps described as “an exciting year” for Q4’s business. It represents Q4’s second earnings report since going public, and its first where the results reflect it being a publicly-traded company.
“Our strong organic growth, combined with strategic M&A opportunities and scale-enhancing operational investments position us extremely well.”
-Darrell Heaps, Q4
Q4 went public in 2021 as part of an unprecedented wave of other Canadian tech initial public offerings (IPOs), raising $100 million CAD through its downsized Toronto Stock Exchange IPO. Despite its underwhelming debut, Heaps downplayed any concerns about the company’s outlook in an interview with BetaKit last year.
In today’s earnings results, Heaps hailed the strength of Q4’s organic growth in 2021 and the merger and acquisition (M&A) opportunities it faces as further reason to be optimistic.
“Our strong organic growth, combined with strategic M&A opportunities and scale-enhancing operational investments position us extremely well to deliver on our strategy, achieve superior growth and advance along our path to profitability, irrespective of the broader market conditions,” said Heaps.
Q4 is listed on the TSX under the symbol ‘QFOR.’ The company provides capital market solutions to the IR industry designed to help public companies better understand their performance and engage with their investors. Q4’s software platform boasts a list of clients that includes Netflix, Visa, McDonald’s, Walmart, Square, Shopify, and Nike.
Q4 opened the day trading at $5.20 CAD per share. Following an initial dip that saw the company’s shares drop to $4.65, Q4’s share price has risen over 13 percent to $5.60 at time of publication.
Q4 has seen significant growth during COVID-19, fuelled by tailwinds associated with the pandemic-driven shift to virtual, the health of North America’s public markets, and its January 2020 acquisition of S&P Global Market Intelligence’s IR web hosting business.
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However, since its IPO, Q4’s share price has dropped precipitously. The company began trading in October at a price of $11.52 CAD per share, reaching a high of $12 before dropping to less than half that amount today, as the company has been impacted by a broader tech stock selloff that has also hurt other publicly-traded Canadian tech companies.
In the fourth quarter of 2021, Q4 generated revenue of $13.8 million USD—a rise of nearly 20 percent from the $11.1 million it saw during the same period in 2020. Q4 also recorded a net loss of $6.3 million, or $0.20 per share, an increase compared to the $5.4 million the company lost in Q4 2020.
Q4 CFO Ryan Levenberg said the company’s fourth-quarter 2021 revenue results exceeded Q4 expectations, attributing this growth to the strength of Q4’s expanded Capital Markets Platform and Platform Services.
In 2021 as a whole, Q4 generated total revenue of $55.4 million, an increase of 37.2 percent compared to 2020, driven largely by a 21.8 percent year-over-year rise in the company’s annual recurring revenue (ARR), which rose to $51.9 million.
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The Toronto firm closed out 2021 with 2,656 total customers, after adding 612 over the course of the year. Although this total represents an increase compared to last year, it constitutes decelerated new customer growth relative to 2020, when Q4 saw its customer base balloon from 1,411 in 2019 to 2,306.
In 2021, Q4 focused some of its sales expansion efforts on existing customers, which led to some organic growth, increasing the number of products its client base was using. According to Q4, this drove improved customer retention rates and a rise in average revenue per account.
Last year, Q4 launched its corporate earnings webcasting platform, through which the company has delivered over 600 earnings events to date.
Q4 also introduced some new environmental, social, and governance (ESG) product offerings, and released its expanded Capital Markets Events platform capable of serving customers’ virtual, hybrid, and in-person conference needs.
Feature image courtesy of Q4.