Vendasta Technologies (TSX:VND) Files to List on TSX

Posted on March 18, 2021 by Mathieu Litalien

The number of upcoming IPOs are beginning to ramp up and Vendasta Technologies is one of many new tech companies that are expect to file to list on the TSX over the coming months. Vendasta filed its preliminary prospectus earlier this week and while pricing details were not included, there is still plenty to digest. 

Vendasta, which is headquartered in Saskatoon, provides channel partners with an end-to-end platform to scale and a curate a marketplace of products and services to sell, both of which are tightly integrated into an operating system that its delivers for small-to-mid sized businesses (SMBs).

The company currently has 43,000 registered channel partners and it has a total addressable market of 6.8M channel partners with a total addressable market of $220B. 

Channel partners are predominately businesses that already have an established relationship with SMBs, or are building an established relationship, through their products and services. These channel partners are Vendasta's customers and include digital agencies, media companies, independent software vendors, value-added resellers and managed service providers.

Here is a snapshot of their model: 

Vendasta has seen exponential growth over the past few years and in 2020, it generated $47.9M in recurring revenue.

Of note, the dip in retention rate in 2020 was directly related to a drop in April/May of 2020 due to the pandemic. The company has a strong ROI in that it earns $4.01 in ARR for every $1 spent on channel partner acquisition. 

The company's growth strategy is pretty simple - grow the channel partner base. It estimates that there are 870,000 potential channel partners in its core segment and by expanding its products/services, that potential channel partner base can grow considerably. It also recently launched Vendasta Payments, and expects to spend significant resources to growth this side of the business.

According to the company, it competes "with companies that provide either a platform for channel partners and/or a marketplace with products and services to sell."  and they do not believe that a direct competitor currently exists. The company's main competition are those that "solve specific problems" for channel partners. Given this, it'll be difficult to place a value on Vendasta. 

That being said, comparing to other SaaS companies like LSPD, DND, NVEI, etc is likely to be appropriate. Overall, we quite like what the company does and will report back once we have pricing. We expect there to be strong demand for this IPO. 

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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.