Industry Perspective

TD Securities Technology Conference Highlights 2022

By: Daniel Chan, David Kwan, Scott Penner

December 19, 2022 - 2 minutes 30 seconds

TD Securities hosted its annual Technology conference from November 21-23, bringing together executives and investors in a range of different information technology segments. IT Spending growth continues to exceed GDP growth as digital transformation remains a key imperative, notwithstanding the geopolitical and economic risks of today. We heard that despite signs of lengthening sales cycles, deal continue to get done. M&A activity has largely paused in 2022 given the dislocation of valuations, but our presenters continue to see accretive opportunities for inorganic growth. Supply chain valuations has buffeted companies in several segments this past year and was a lively topic of discussion, as was the growing cybersecurity market.

"TD has been hosting our annual Technology conference in the fall to preview industry themes and dynamics that will shape strategy for the year ahead. This year we proudly welcomed over 30 companies giving a broad look at spending trends across a broad range of technology segments and across leading private and public companies. Interest for investor meetings was a record high, indicating active discussion – and enthusiasm – for where to place bets in 2023"

– Scott Penner, Managing Director, Technology Investment Banking, TD Securities

Some of the key themes were:

Macro conditions remain a focus.

Although we are seeing signs of elongated sales cycles and tougher scrutiny of larger deals, executives we spoke with indicated that macroeconomic conditions have not yet materially impacted their operations. Moreover, to help mitigate the impact of wage/cost inflation, companies are increasingly digitizing and automating operations and processes, as well as increasing prices, with little to no customer pushback.

Becoming more of a buyers' M&A market.

Private company valuation expectations have moderated in recent quarters, albeit not necessarily in-line with their publicly traded peers in all circumstances. Although valuations have declined over the last year, including their own, some acquirers are still finding (very) accretive acquisition opportunities. In general, many acquirers have raised the bar for acquisition criteria.

Supply chains still facing challenges.

The general consensus was that global supply chains are improving but issues remain. Certain countries, such as China, remain challenging due to pandemic-related restrictions and/or geopolitical issues, with more OEMs looking to shift manufacturing activity to other regions, with more near/onshoring activity expected in the coming year. Many companies are still carrying elevated inventory levels, which could increase risk from potential slowing customer demand. These dynamics have generally benefited supply chain technology companies, but negatively impacted hardware OEMs and hardware-centric ITSPs/VARs.

Cybersecurity becoming a top-of-mind topic.

The proliferation of digital data generated combined with remote work has exacerbated the challenges of fending off cyberattacks in recent years. Cybersecurity remains at or near the top of CIO's priority lists, with cybersecurity solution providers and IT services vendors witnessing strong demand, as customers look to protect their distributed workforces and digital assets.

Disclaimer

The views or opinions expressed herein represent the personal views of the writer and do not necessarily reflect the views of TD Securities or its affiliates.

This material is intended to provide commentary on the market for commodities discussed herein.

Not Advice: The information contained in this material is for informational purposes only and is not intended to provide professional, investment or any other type of advice or recommendation, or to create a fiduciary relationship. Neither TD Securities (USA) LLC (“TD Securities USA”) nor any of its affiliates (collectively, “TD”) makes any representation or warranty, express or implied, regarding the accuracy, reliability, completeness, appropriateness or sufficiency for any purpose of any information included in this material. Certain information may have been provided by third-party sources and, while believed to be reliable, has not been independently verified by TD, and its accuracy or completeness cannot be guaranteed. You should not make an investment decision in reliance on this material, which is intended to provide only brief comments on the topics addressed, and is based on information that is likely to change without notice.

Not Securities or Derivatives Research: This material has not been produced, reviewed or approved by TD’s securities or derivatives research departments. The views of the author may differ from others at TD, including TD securities or derivatives research analysts. Not Independent: The views expressed in this material may not be independent of the interests of TD. TD may engage in conflicting activities, including principal trading before or after posting this material, or other services involving commodities discussed in this material, or related financial products. TD may have a financial interest in the commodities discussed in this material, including, without limitation, a financial product that references such commodities.

Not An Offer or Solicitation: Nothing contained in this material is, or should be construed as, an offer, a solicitation of an offer or an invitation to buy or sell any commodity, or any financial product that references such commodity, and it is not intended for distribution in any jurisdiction where such distribution would be contrary to law.

Risk of Loss. Transactions in commodities, and financial instruments that reference commodities, involve risk of loss, and are subject to the risks of fluctuating prices. You should weigh potential benefits against the risks. Past performance is no indicator of future performance and the Materials are not intended to forecast or predict future events.

Daniel Chan
Research Analyst Technology, TD Securities

Biography

Daniel joined TD Securities in 2015 with over 10 years of experience in the technology sector. Previously a technology analyst at Scotia Capital and an engineer at Qualcomm and Motorola/Freescale, he brings a unique perspective to his research which combines market experience and an insider's perspective. Daniel has an electrical engineering degree from the University of Toronto and an MBA, with distinction, from Oxford University.

David Kwan
Research Analyst Technology, TD Securities

Biography

David joined TD Securities in 2020. He has covered the technology sector for over a decade and has also worked in investment banking and institutional equity sales at both bank-owned and independent investment dealers. David graduated with Honours from the University of British Columbia with a Bachelor of Commerce degree (major in Finance) and is a CFA charterholder.

Scott Penner
Managing Director, Technology Investment Banking, TD Securities

Biography

Scott oversees TD Securities' Investment Banking efforts in the Canadian Technology sector, responsible for the team’s effective marketing, structuring and execution of all corporate finance products, M&A and advisory services. Scott transitioned to investment banking in April 2015, following 15 years as a top-ranked technology research analyst with TD. Notable capital markets activities include leading the recent IPOs of D2L and Softchoice, TD's bookrunner role on Docebo, as well as private capital raises for Kognitiv and Jobber. Notable advisory mandates include the acquisition of A&L Laboratories by Deveron, the sale of Accelerator to Hexagon, the privatizations of EXFO and Mitel Networks, the sale of BSM Technologies to Geotab, and the acquisition of ACCEO by Constellation Software. Scott holds an MBA from McMaster University and is a CFA charterholder. He has lectured in equity analysis and capital budgeting for the Toronto Society of Financial Analysts.

Industry Perspective

TD Securities Technology Conference Highlights 2022

Macro conditions remain a focus.

Becoming more of a buyers' M&A market.

Supply chains still facing challenges.

Cybersecurity becoming a top-of-mind topic.

Disclaimer

Biography

Biography

Biography

Related Content

Share This Article