Tech companies are starting to profit from cost-cutting. But can they rev up growth again?

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Thinkific joins Lightspeed in posting faster-than-expected adjusted operating profit. Is D2L next?

Fast-growing Canadian technology companies that slashed spending last year to focus on the bottom line are starting to hit their profit targets.reported that, for the first time since going public, it had generated positive earnings before interest, taxes, depreciation and amortization and further adjustments for items including share-based compensation and related payroll taxes.

It paid off on the markets Wednesday as the company’s chronically underperforming stock surged more than 30 per cent at one point on the Toronto Stock Exchange and was trading up more than 10 per cent at midday. Meanwhile, online training software vendor Docebo is ahead of most of its Canadian peers after reaching operating profitability several quarters ago.

The muted economic conditions have hit sales cycles and slowed revenue growth for enterprise software companies. Meanwhile, many like Shopify Inc., which benefited from a surge in business during the sheltering-at-home phase of the pandemic, have left behind the tougher year-over-year results that followed as growth rates subsided.

 

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