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Three High-growth Canadian Tech Companies Benefiting from the shift to online by SMBs


The number of small businesses in the United States is astounding. There are approximately 31 million SMBs (Small and Medium-Sized Businesses), accounting for over 99% of all U.S. businesses. Of these, over 80% are operated by sole proprietors with no staff.

Why are these numbers so compelling?

SMB owners are busy juggling an exhaustive list of day-to-day operations. They need practical and simple solutions to the challenges and opportunities they face in running their businesses.

Three growing Canadian Tech companies are taking advantage of this lucrative demographic.
Shopify (Shopfiy Stock Quote, Chart, News, Analysts, Financial TSX:SHOP)), Thinkific (Thinkific Stock Quote, Chart, News, Analysts, Financials TSX:THNC)), and Wishpond (Wishpond Stock Quote, Chart, News, Analysts, Financials TSXV:WISH) ) are seizing a huge growth opportunity by providing cost-effective solutions that are easy to implement and maintain.


E-commerce providers like Shopify are now processing hundreds of billions of dollars in transactions every year. With its complete platform, Shopify ($SHOP) helps SMBs to start, grow, and manage their business, both online and/or in-person in a physical store. It allows users to build a website from scratch or even simply integrate its merchant payments functionality into an existing website.

Shopify’s simplicity is particularly well-suited to entrepreneurs and SMBs, as it allows them to create and operate their own website to sell products, without requiring any specialized programming or technical knowledge. Freeing owners of the high costs of web developers, ongoing support, or even middlemen.

Since listing on the TSX and NYSE six years ago, Shopify has grown into a juggernaut, topping the TSX with its $240 billion in Canadian Dollars market cap, making it the third largest e-commerce platform in the world, behind only Amazon and Alibaba. In 2020, Shopify processed $120 billion in Gross Merchandise Volume (GMV), up from $61 billion in 2019. In other words, the total dollar value of orders on the Shopify platform in the year almost doubled year-on-year.
In the last quarter alone, GMV hit $42.2 billion, up by 40% year-on-year.

Shopify generates its revenue through high-margin Subscription Solutions and high-volume Merchant Solutions. The metrics for both business units are also surging each year. 2020 was a blockbuster year for Shopify as the COVID pandemic resulted in an explosion in the growth of digital channels for retailers. Even in a post-reopening world, Shopify continues to grow rapidly.

Shopify’s total revenue in the last quarter increased 57% year-over-year to $1.12 billion, with Subscriptions contributing $334 million, while Merchant Solutions made up $785-million.

After several years of trading at an operating loss due to pouring excess profits back into sales and marketing growth efforts, at the end of July 2021, Shopify posted its fourth consecutive quarterly operating profit at $139.4 million, versus an operating income of $0.3 million for the comparable period a year ago.


The street expects Shopify to generate revenues of $4.6 billion USD in 2021. At around $1,500 USD per share, the company has a market cap of $190 billion, putting the price to revenue multiple at 41 times. Shopify is one of the fastest growing major e-commerce platforms in the world. This, along with their entrepreneur and SMB friendly business model has made Shopify a juggernaut with a significant moat around its business. All of this justifies a premium valuation for the stock. Having said that, while I continue to hold my shares, I find the valuation too lofty to add any shares to my position here. I would need to see the stock to at the lows it put in for 2021 back in May before I would consider adding to my position.



Online learning is booming and the COVID pandemic has only helped propel the sector even further. Global Market Insights estimates the e-learning market was worth $250 billion in 2020 and will exceed US$1 trillion by 2027.

Thinkific’s platform lets subject matter experts create, sell and deliver online courses to an audience from their website, allowing them to retain full control of their business, branding and content. It includes all the tools from initial course creation to e-commerce integration and marketing.

Thinkific is a relatively new entrant to the Toronto Stock Exchange (TSX), having just recently completed an initial public offering in late April 2021, it kicked things off with a $1 billion valuation. In its opening quarterly report (Q1 2021), Thinkific saw revenue surge 152% year-over-year to
US$8.3 million, taking its annual recurring revenue to $34.8 million. Gross Merchandise Volume improved by 156% to $107.1 million, driven by an increase in both the number of course creators and their ability to monetize their offerings. The company ultimately recorded a net loss of $1 million for the period, due to its continued investment in growth. However, these investments appear to be paying off as the number of paying customers improved by 115% year-on-year to 27,500 reflecting the growing awareness of the platform.

Thinkific’s business performance accelerated materially over the last two years, and the continuing cycle of lockdowns and restrictions are only helping to boost the trend towards digital consumption and online learning. For Q2 2021, it generated revenues of $9.1-million, representing year-on-year growth of 101%. The current Annual Recurring Revenue (ARR) is $38 million.


As one of the leaders in the fast-growing e-learning market, Thinkific commands a premium valuation. While I expect Thinkific to continue to trade at elevated multiples, I believe there will be better entry points for this stock. At $14 CAD per share, the stock has an Enterprise Value to Sales multiple of 24. Thinkific could be a good addition to a growth portfolio on any meaningful pull back in the stock and I would consider starting a small position if the shares drop to the $10 to $11 range.



Even once set up and operating, the vast majority of SMBs are not in the position to devote a considerable amount of resources to marketing, despite its critical importance in growing sales.

Wishpond aims to be the world’s easiest marketing platform for generating and managing sales leads. It provides users with tools to create email campaigns, build website landing pages, run social contests, as well as features for managing and reporting customer demographics and behaviours.

Wishpond does the heavy lifting using its technology and professional designers to help SMBs avoid having to become marketing experts themselves.
After listing on the TSX Venture exchange in December 2020, Wishpond’s stock price soared from its RTO price of 75 cents CAD to $2.53 CAD within weeks. Since then, and up until recently the stock had mostly a slow downward trajectory. Things look to have turned around for the stock dramatically since the company announced its Q2 results, with the shares up close to 50% in a short week from a low of $1.02 CAD to $1.49 today.

With a current Enterprise Value of $70 million CAD, Wishpond’s subscription-based recurring revenue model provides excellent revenue and cash flow visibility. In Q2 2021, Wishpond achieved record quarterly revenue of $3.2 million up 73% compared to a year ago. Gross margin also increased to 69%, compared to 64% in Q2 2020. While earnings did decrease with an adjusted EBITDA loss of $0.3 million, the result was due to increased costs in ramping up both the sales and product development areas as the company prepares for strong anticipated growth in the second half of the 2021 fiscal year.

Wishpond has a strong cash position of approximately $10M, thanks to a capital raise at $1.75 per share which collected just over $8 million in Q1 2021. The funds have them well prepared to achieve strong growth as the company pursues organic and inorganic growth opportunities through acquisitions. The company announced its third acquisition this week since going public.

Going forward, with sufficient capital, a pipeline of opportunities that in management’s opinion is fairly robust, and a growing digital tailwind, Wishpond offers good potential for future growth.


Of the three companies here, Wishpond is the smallest and the least well-known to investors. The lack of investor awareness means Wishpond trades at much lower multiples compared to Shopify and Thinkific. At $1.50 CAD per share, Wishpond trades at a relatively modest Enterprise Value to Sales ratio of 4.6 based on management’s current revenue expectations for 2021. Many of Wishpond’s publicly traded peers trade at more than 10 times EV/Sales ratio.

Wishpond’s board of directors recently announced a Normal Course Issuer Bid (NCIB) to purchase up to 5% of the outstanding shares of the company in the open market for cancellation because in their view the current price of shares does not fairly reflect the value of the business.

While there is no guarantee that the company will purchase a meaningful number of its own shares in the open market, the NCIB does offer some downside protection to investors. Given the fact that the company raised funds at $1.75/share, management is likely to repurchase shares for cancellation if the stock trades significantly belows $1.75.

Overall, given Wishpond’s relative valuation, current growth rates, and the downside protection offered by the NCIB, the stock offers a good entry point at these levels. Given that Wishpond is a microcap stock, you should only invest a portion of your portfolio in this stock that you can afford to lose and not cash out for a long period of time.

Disclosure: Wishpond is an annual sponsor of Cantech Letter. Disclaimer: The information and recommendations made available here through our emails, newsletters, website, press releases, collectively considered as (“Material”) by Cantech Letter is for informational purposes only and shall not be used or construed as an offer to sell or be used as a solicitation of an offer to buy any services or securities. You hereby acknowledge that any reliance upon any Materials shall be at your sole risk.

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About The Author /

Navid Boostani is a fintech entrepreneur, an engineer, and a CFA charterholder. Navid's interests lie in the intersection of technology and finance. In his spare time, Navid loves to research and learn about companies that are leveraging new technologies to change the way we do business.
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