Pacific Trader: Copperleaf shows its utility through market rout

Credit: EY

Copperleaf Technologies CEO Judi Hess is moving upstairs to make way for Paul Sakrzewski

The analytics firm serves customers managing trillions of dollars worth of infrastructure

The stock: Pity the folks who bought into Copperleaf Technologies (TSX:CPLF) upon its initial public offering last October. They’ve watched the stock plunge from $15 a share to $6.33 as of Tuesday’s close. Tech stocks with most (or, in Copperleaf’s case, all) of their profits in front of them were still in vogue in late 2021, remember. Then resurgent inflation began to eat away at the net present value of those future earnings. The Vancouver analytics firm is in good company, with the likes of Meta Platforms (a.k.a. Facebook)(NASDAQ:META) and Shopify (TSX:SHOP) likewise cut off at the knees.

The drivers: But for those who’ve been paying attention, Copperleaf’s stock has been bumping along a technical support level—dare we say floor?—of late. And virtually all the analysts that cover it still have faith in its progress towards profitability.

Founded in 2000, Copperleaf is about big data in a small niche. It develops software that helps energy and water utilities plan their investments to meet consumer demands far into the future. This is a sticky business, almost immune to the economy’s ups and downs, and Copperleaf has never lost a client. Its customers collectively manage some $2.7 trillion worth of infrastructure.

In the second quarter ended June 30, Copperleaf reported revenue of $20.6 million, up 23 percent over the same period in 2021. The company’s net loss rose to $7.4 million (11¢ a share), though its gross profit on operations hit $15.7 million. So far in Q3, the firm has won new clients in the U.K.’s United Utilities and Washington Gas Light Company in the U.S.

It also announced a leadership transition whereby president Paul Sakrzewski will succeed CEO Judi Hess effective January 1, 2023. Hess, named one of EY’s Entrepreneurs of the Year for the Pacific Region in 2021, will stay on as vice-chair and chief strategist.

Word on the street: “We believe the shares are compelling in light of the multi-year growth trajectory and multiple expansion as Copperleaf re-rates closer to peers,” wrote RBC Dominion Securities analyst Maxim Matushansky in a report initiating coverage of the stock. He gave Copperleaf an “outperform” rating and $10 price target.

Coming & going: Education technology company Thinkific Labs (TSX:THNC) of Vancouver has appointed Steve Krenzer as its new president. Krenzer’s experience includes stints at Groupon as chief operating officer and Core Digital Media as CEO.