TD Securities Technology Conference Highlights 2022

By: Daniel Chan, David Kwan, Scott Penner

December 19, 2022 - 2 minutes 30 seconds
Two hands holding a computer CPU chip.
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.

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.

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Headshot of Daniel Chan

Daniel Chan
Research Analyst Technology, TD Securities

Headshot of Daniel Chan

Daniel Chan
Research Analyst Technology, TD Securities

Headshot of Daniel Chan

Daniel Chan
Research Analyst Technology, TD Securities

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.

Headshot of David Kwan

David Kwan
Research Analyst Technology, TD Securities

Headshot of David Kwan

David Kwan
Research Analyst Technology, TD Securities

Headshot of David Kwan

David Kwan
Research Analyst Technology, TD Securities

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.

Headshot of Scott Penner

Scott Penner
Managing Director, Technology Investment Banking, TD Securities

Headshot of Scott Penner

Scott Penner
Managing Director, Technology Investment Banking, TD Securities

Headshot of Scott Penner

Scott Penner
Managing Director, Technology Investment Banking, TD Securities

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.

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