Canadian tech companies make their way to the US markets - The Average Joe

    Canadian tech companies make their way to the US markets

    Victor Lei β€” Head of Research

    October 13, 2021

    Canadian Tech Infiltrates the US Markets

    October 13, 2021

    Canadian tech companies are making their presence in the US markets known β€” as the number of dual listings on the Canadian and US stock exchanges rise.

    US investors are getting more access to the Canadian tech sector β€” on the verge of exponential growth and at cheaper valuations than US stocks.

    Coming to a stock market near you

    In recent years, Canada has seen many tech successes, including Shopify and Lightspeed β€” both trading on US exchanges. Joining the list is a Canadian payments company, Nuvei, which debuted on the NASDAQ last week. This comes a year after going public on the Toronto Stock Exchange last September β€” and is up 240% since.

    Nuvei is a payment technology provider with a focus on mobile and e-commerce payments β€” providing over 480+ different payment methods (i.e. Visa, Apple Pay, etc), 150+ foreign currencies and 40+ cryptocurrencies.

    • Making money: Nuvei takes a transaction fee from all payments processed through its network.
    • Going global: Operations in North America, Europe, Middle East, Africa, Asia Pacific and Latin America.
    • Profitable, fast-growth: Sales grew 112% in the second quarter and 92% growth is expected in the coming quarter.

    Positioned to win

    Nuvei built its business powering mobile and e-commerce transactions β€” which made up 84% of its total transaction volume in the last quarter. And now it’s well-positioned to expand into fast-growth markets given the acquisitions it made in 2021:

    • Sports betting β€” by acquiring sports gambling payments provider, Mazooma.
    • Cryptocurrencies β€” by acquiring Simplex, a payments infrastructure provider for the crypto industry.
    • Latin America β€” by acquiring Paymentez, a payments provider serving the LATAM market.

    After raising $369M from going public in the US, investors can expect more growth-fuelled acquisitions from Nuvei.

    Investors: The future is fintech

    With a price-to-sales multiple of 36x, Nuvei isn’t cheap. But neither are the other high-growth fintech companies that have been on fire in the past 6 months:

    • AI lending platform, Upstart (NASDAQ:UPST), trades at a 50x price-to-sales multiple β€” and is up 151%.
    • Buy now pay later platform, Affirm (NASDAQ:AFRM), trades at a 42x price-to-sales multiple β€” and is up 101%.

    But Nuvei has two things over these companies β€” profitability and a large international presence.

    Looking forward: Nuvei is expected to release its third-quarter earnings results on Nov 10, with sales expected to grow ~ 92%. But given how Nuvei beat sales expectations each time in the past 3 quarters, let’s see if it can’t keep up the trend and continue its growth in the triple digits.

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