Magnet Forensics (MAGT) Files to List on the TSX Index

Posted on April 25, 2021 by Mathieu Litalien

See what founder Dan Kent is investing in right now

Dan is on blossom with over 20,000 Canadian investors sharing insights and real-time trades:

As recent IPOs have struggled to gain traction, Magnet Forensics filed its preliminary prospectus to list on the TSX Index.  The company is looking to raise $90 million in from the issuance of between 5,625,000 and 6,428,571 subordinate voting shares priced between $14-$16.00 per share. Magnet is expected to trade under the symbol “MAGT”.

Assuming an offering price at the midpoint ($15), Magnet Forensics will have 9,330,189 subordinate voting shares (if the over-allotment is exercised in full) and 31,071,825 multiple voting shares outstanding. That gives it a total of 40,402,014 shares outstand and an implied market cap of $606M.

So what does Magnet Forensics do exactly? The company’s digital investigation tools have been used around the world in cases against terrorism, human trafficking, online child sexual exploitation, cybercrime and enterprise theft. The company’s SaaS platform (AXIOM) is a full end-to-end digital investigation platform:


The company has been growing revenue at a 38% clip  and in 202, the company took a meaningful step towards profitability. The company’s average recurring revenue per account has grown to US$9,400 per account in 2020 from US$5,100 in 2018.


There is no doubt that the market for Magnet’s products is vast – and is likely to keep growing. In 2020, the company’s solutions were used by over 4,000 customers across 94 countries. Approximately 65% of customers are in the public sector. Digital evidence is increasingly complex and often public and private organizations simply don’t have to tools and capacity to keep up to fully address the rapidly evolving world of cybercrime.

The global digital investigations and intelligence marked is projected to reach $10.2B in revenue by the end of 2026 and achieve a CAGR of 10.1% over the next five years.


The company’s approach to growth is centered on four strategies:

  • “Land and Expand” – growing markets in new geographic regions
  • Private Sector expansion
  • Expand product offerings – new and innovative features into its platform
  • Acquisitions

Based on its implied market cap of $606M, the company looks to be valued at 9.50 times sales and 55 times earnings. Since it does not have any pro-forma statements post acquisition yet listed, we cannot estimate the EV/EBITDA ratio. Assuming it can match its historical growth rate and it can maintain 2020 margins, that would give it a forward P/S and P/E ratios of 6.88 and 39.92.

Overall, the company operates in a very unique space and that alone should generate some interest. The current valuations are a little rich, especially considering most of the tech industry is seeing some consolidation. That being said, the uniqueness of its offerings does set it apart. As such, we’d consider it fairly valued should it price at the mid-range of expectations.

Fun fact, Magnet Forensic is the first Waterloo-based tech company to go public in 15years and counts several former Blackberry executives as leaders – including Chairman of Magnet – Jim Balsillie. In fact, only 5 of the 16 executives have no ties to Blackberry.

See what founder Dan Kent is investing in right now

Dan is on blossom with over 20,000 Canadian investors sharing insights and real-time trades:

Disclaimer: The writer of this article or employees of Stocktrades Ltd may have positions in securities listed in this article. Stocktrades Ltd may also be compensated via affiliate links in this post. Stocktrades Ltd will run advertisements on our posts. These advertisements do not represent an endorsement by us.

Mathieu Litalien

About the author

Mathieu is an individual investor and has been investing part-time for the better part of the past 20 years. He is primarily interested in fundamental analysis, focusing on the long-term and his portfolio is composed primarily of dividend-paying equities. Mathieu has a moderate risk profile and also looks for growth and value. His passion for finance and the markets have led him to his MBA and writing for Seeking Alpha and Stocktrades. Mathieu also focuses primarily on stock research and content production for Premium and the Stocktrades blog.