For more than 10 years, MedCity INVEST has brought together active investors and promising startups across biopharma, diagnostics, medical devices, and health tech. The conference content highlights opportunities and challenges in the healthcare industry amidst a shifting landscape of consumer convenience, the shift to value-based care, the desire for seamless care coordination and more equitable and affordable healthcare for all.
The MedCity INVEST conference is scheduled for May 21-22 at the Ritz-Carlton hotel in Chicago. In addition to panel discussions around some of the hottest topics in healthcare transformation, there is also a startup pitch contest, a presentation on government funding for startups and networking opportunities.
Among the speakers are:
Chris Sasiela, Director Innovator Support Services, National Institutes of Health SEED
Nitin Natarajan, Deputy Director, Cybersecurity and Infrastructure Security Agency (CISA)
Dr. Rekha Kumar, Chief Medical Officer, Weill Cornell Medical College
Brian Montgomery, Chief Strategy Officer, GE Healthcare
Laura Fox, Director, Payment Innovation, Blue Shield of California
Michael Greeley, Co-Founder & General Partner, Flare Capital Partners
Steven Knight, Chief Operating Officer, Quantum Health
Margaret Rehayem, Vice President, National Alliance of Healthcare Purchaser Coalitions
Henry H. Ting, Chief Health & Wellness Officer, Delta
George Khalife, Vice President of Midwest U.S., Toronto Stock Exchange & TSX Venture Exchange
Jack Stockert, Managing Director, Health2047
Startups for Payer/Provider and Consumer/Employer tracks of the Pitch Perfect contest have been finalized. Companies in the medical device and biopharma tracks will be announced in the coming weeks.
Startups taking part in the contest include:
Sponsors include: NIH Seed, Quantum Health, HSBC, Toronto Stock Exchange, MHub, Canada. Our partner for the event is Mid America Healthcare Investors Network
(Reuters) – Canada’s main stock index opened higher on Wednesday, pulled up by materials and tech stocks tracking higher prices of precious metals, while investors awaited fresh cues on the timing of interest rate cuts by central banks.
At 9:30 a.m. ET (13:30 GMT), the Toronto Stock Exchange’s S&P/TSX composite index was up 58.18 points, or 0.27%, at 21,701.05.
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(Reporting by Purvi Agarwal in Bengaluru; Editing by Ravi Prakash Kumar)
Engine Gaming and Media, Inc. (NASDAQ:GAME) Q4 2024 Earnings Call Transcript April 16, 2024
Engine Gaming and Media, Inc. isn’t one of the 30 most popular stocks among hedge funds at the end of the third quarter (see the details here).
Operator: Good afternoon and thank you for joining us for the GameSquare Holdings 2023 Full Year Conference Call. On the call today, we have Justin Kenna, GameSquare’s CEO; Lou Schwartz, President; and Mike Munoz, CFO. [Operator Instructions] Before management discusses the results, I’d like to remind everyone that certain statements in this call may be forward-looking in nature. These include statements involving known and unknown risks, uncertainties and other factors that could cause actual results to differ materially from those expressed or implied in our forward-looking statements. For information about forward-looking statements and risk factors, please see our 10-K for the year ended December 31, 2023 which is available on the company’s website or with the Securities and Exchange Commission. I will now turn the call over to GameSquare’s CEO, Justin Kenna. Please go ahead.
Justin Kenna: Thank you and good afternoon to everyone joining us on today’s call. I’m extremely excited to review the progress we are making at GameSquare as we pursue strategic priorities aimed at creating a next-generation media business. Since GameSquare’s inception in August of 2020, we have quickly scaled revenue primarily through an M&A strategy focused on acquiring industry-leading technology, media and creative assets and we ended 2023 with $52 million in annual revenue compared to $28 million in 2022 and just $11 million in 2021. Growth in 2023 would have been stronger had we owned Engine Gaming for the full year and revenue would’ve increased to $61 million in 2023. As you can see, we have been extremely active in executing our growth strategies, optimizing our business model and building a disruptive platform that we believe will create lasting value for our shareholders.
To date, we have completed 5 acquisitions while divesting 2 non-core assets since August of 2020. Integrating acquisitions takes a significant amount of focus, resources and time. There are also onetime expenses over the near term that we incur before we start to see the financial benefits of operating and cost synergies. I want to recognize the dedication and efforts of the Board, management team and associates at GameSquare as well as our acquisition partners. I believe we will see the benefits of our M&A efforts in 2024 and beyond and I want to use my time today to review our 2023 performance, the actions we have completed in 2023 and so far this year and the go-forward strategies we are pursuing before turning the call over to Mike to run through our financial results in 2023.
As I said, it takes time before the benefits of an acquisition can be seen in the company’s financial results. Our 2023 financial results also reflect softer growth than we had anticipated at the beginning of the year. This was impacted primarily by a slowdown in spending by several of our brand partners on the media side of our business and other delays as a result of more cautious overall spending patterns. These trends were seen across the media and advertising landscape. We were not immune from broad budget cuts in 2023. As a result, two high-margin multimillion programs that we expected to recognize earlier in the year were pulled during the fourth quarter. These programs had an impact on both sales and profitability during the quarter and our mix of revenue was more skewed to lower-margin programmatic advertising sales.
While budgets retracted in 2023, we don’t believe this trend will continue in 2024. We are starting to see signs of normalizing advertising spend and our pipeline remains really strong. In fact, few [ph] programs in 2023 remain in our pipeline which we expect to materialize and convert into sales in the near term in 2024. As GameSquare’s business has evolved during the fourth quarter, we also restructured our sales and marketing organization to better align with our new operating model. We added a new proven Head of Commercial to lead our high-performing sales team. While this temporarily impacted sales during the fourth quarter, our team has done a tremendous job maintaining relationships and supporting our pipeline which we believe will convert into new sales opportunities in 2024 and beyond, especially as our markets continue to improve.
Despite these near-term impacts, we have made significant progress executing against our long-term growth strategies. So let’s look at the actions we’ve completed in more detail, starting with the Engine Gaming acquisition. In April 2023, we completed the acquisition of Engine Gaming which significantly enhanced our scale and added technology-based capabilities to enhance our differentiated next-generation media platform. I’m encouraged by the progress we made integrating the acquisition and removing duplicative operating and corporate expenses throughout the year. While the extent of the cost synergies have been marked by additional M&A activities, we estimate that we have removed approximately $7 million of annualized cash operating expenses from the combined business during 2023 as a result of the transaction.
The Engine transaction also fast tracked our efforts to list on the NASDAQ Stock Exchange in 2023. And most recently, in March 2024, we voluntarily delisted from the TSX Venture Exchange and re-domiciled the company from Canada to the U.S. where the majority of our operating subsidiaries, brand partners and shareholders are located. While these actions required investments during the 2023 fourth and 2024 first quarters, they have simplified our operating structure and they are expected to further reduce our operating expenses going forward. During 2023, we made strategic investments in our business to continue to provide our brand partners with new innovative technologies and services. This includes the 2023 launch of our world-building capabilities.
World building develops custom worlds for brands and popular gaming titles such as Fortnite and Roblox. And during 2023, we worked with global brands, including Mastercard, Samsung, Six Flags and Coca-Cola. Through our world-building efforts, we provide end-to-end solutions, including conceptualization and development of gaming worlds, along with a campaign strategy, execution and amplification through the marketing services offered by our various subsidiaries. World building has been a fast-growing, high-margin strategy and we expect these activities to continue to drive organic growth in 2024. Another organic area of growth in 2023 was through our creative-driven marketing initiatives. The combination of Engine Gaming’s best-in-class technology assets with GameSquare’s award-winning agency and creative capabilities allows the company to offer unparalleled insight into consumer behaviors.
It also allows us to develop data-driven creative strategies and measure and optimize campaigns towards customer acquisition goals in real time, creating impactful marketing solutions that drive ROI for GameSquare’s customers. Finally, having an omni-channel engagement approach has become an important component to building audiences. As a result, during the fourth quarter of 2023, we made additional investments in our events business, including the addition of Paul Ioakim to lead this division and our efforts to support our brand partners as they look to drive powerful and immersive connections with their customers. We continue to focus on investing in organic growth opportunities while optimizing our business to take advantage of large growing secular growth trends.
I’m pleased to announce that over the past 4 months, we have completed the biggest moves in our company’s history. First, because of the Engine transaction, we completed the sale of non-core radio assets associated with Frankly Media in December of 2023. The radio assets had approximately $1.8 million of annual sales and added $2.75 million of non-dilutive capital to our balance sheet with another $650,000 in the form of contingent consideration to be collected in April 2024 and ’25, if the contingencies are met. Most importantly, in March of 2024, we completed the acquisition of FaZe Clan, marking a significant milestone in our journey to revolutionize the gaming and media landscape. FaZe Clan is one of the biggest brands and influencers across the global gaming market.
The combination with FaZe continued our strategy of acquiring leading companies focused on esports gaming and youth culture to increase capabilities, grow scale, unlock cost savings, empower fans and creators and drive ultimate value for our shareholders. We believe there are significant strategic and financial benefits to the acquisition as we leverage the powerful infrastructure we have created and full spectrum of resources within against their ecosystem to reinvigorate and drive value at FaZe. I’m extremely excited to welcome back 3 of FaZe Clan’s founders to lead FaZe and to re-establish the brand’s authenticity. FaZe Banks, Temperrr and Apex are highly motivated to reengage with FaZe’s core fan base and empower FaZe’s creators and community.
This strategic alliance strengthens our positions across global industries, amplifies our ability to connect brands with elusive and influential youth audiences and unlocks even more opportunities to support our partners with cutting-edge technology. Together, we will seek to redefine the future of esports and gaming by leveraging our combined expertise to pursue opportunities for growth and innovation. Our commitment remains unwavering as we aim to lead the way in shaping the ever-evolving intersection of gaming, media and brand engagement. As a result of the FaZe acquisition, GameSquare has built the top creative network in the gaming and esports space. GameSquare and FaZe Clan will combine a hyper-engaged global fan base with a core focus on 13- to 34-year-old audiences.
We will have a powerful portfolio of brand partners that include Porsche, Nike, Jack in the Box, Xfinity, Dairy MAX, GHOST and many more. Over the near term, we are focusing on removing costs from the combined company and have identified over $18 million in future run rate cost savings supported by reduced corporate costs and focus on driving efficiencies across the organization. We are also quickly pursuing licensing opportunities for the FaZe brand, leveraging FaZe’s success, building an innovative drill revenue model that has generated over $75 million of product sales and $7 million of high-margin gross co-branded product revenue. Given FaZe Clan’s proven track record and a strategy of selling co-branded products at retail, compounded with the incredible resources within the GameSquare ecosystem, we are excited to see continued growth on this high-margin business in 2024 and beyond.
As a result of the FaZe Clan acquisition and to support our growth initiatives, we successfully raised $10 million from existing shareholders, new investors and members of the Board, further strengthening our balance sheet. Finally, in March 2024, we completed the sale of our prior esports team, Complexity Gaming, to total consideration of $10.4 million. The sale of Complexity follows a successful growth strategy which from 2021 to 2023 saw sales increase 175% and the number of aggregate social followers under our ownership increased by 10x. Through the FaZe Clan acquisition, we now own one of the most successful and influential esports teams in the world. We are focused on replicating the rapid growth strategy we pursued with Complexity now with FaZe Clan and expect to see similar growth trends in the coming years.
As you can see, it’s been a very busy and exciting period at GameSquare. Summarizing actions we have recently completed, we’ve unlocked significant value for our shareholders by selling non-core businesses that, combined, represented approximately $13 million in annual revenue last year. These efforts will contribute approximately $13.8 million in non-dilutive capital when fully realized. We also recently completed a $10 million equity raise from new and existing shareholders and completed the all-stock acquisition of FaZe Clan that was valued at approximately $14 million and had an annual sales in 2023 of approximately $43 million. So with this overview, let me turn the call over to Mike to run through our financial results in more detail.
Mike Munoz: Thanks, Justin. Comparing our 2023 full year results to the prior year, total revenue increased by 85.2% or by $23.9 million to $52.0 million from $28.1 million in the prior year. The increase in revenue was primarily due to the contribution from the April 2023 Engine Gaming transaction. Gross margin for the 2023 full year was $13.4 million or 25.9% of sales compared to $9.7 million or 34.4% of sales in 2022. The decline in gross margin for the year reflects a less profitable mix of sales which temporarily impacted gross margin in the fourth quarter. While we have made significant strides in improving our operating cash burn figures, on a combined basis, adjusted EBITDA losses for 2023 amounted to $15 million compared to a loss of $13.2 million last year.
As a percentage of revenue, our adjusted EBITDA improved from 47.2% last year to 28.8% in 2023. We believe the integration activities between GameSquare and FaZe Clan will yield annual cost savings of approximately $15 million in 2024, when comparing GameSquare and FaZe Clan pro forma combined results in Q4 2023 to combined results in Q4 2024. With this overview, I’ll turn the call over to Justin.
Justin Kenna: Thanks, Mike. As you can see, 2023 and the beginning of 2024 have been historic periods for the company as we work to build a disruptive and innovative next-generation media company. We are pursuing additional value-creating actions to not only optimize our business but add additional capabilities and resources to the company. Looking to 2024, on a pro forma basis, that assumes a full year’s contribution for the March 2024 FaZe Clan acquisition, we expect to achieve over $100 million in annual revenue with an annual gross margin to range between 22.5% to 27.5%. We are also committed to executing against strategies that reduce SG&A expenses and ultimately drive profitability. I’m extremely excited by the direction we are headed and I look forward to updating investors on our success on our first quarter conference call in May.
So with this overview, Lou, Mike and I are happy to answer questions. I’ll throw it back to the operator to open up on Q&A. Thank you.
Operator: [Operator Instructions] Our first question comes from Sean McGowan of ROTH Capital Partners.
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Sean McGowan: If I can, I got a couple of questions. One on the gross margin. I think, Mike, you were talking about factors that affected the full year margin being mostly mix. But if you look at it on a — just for the fourth quarter, it seems quite a bit lower than just a mix issue. Are there other kind of onetime things, maybe true-ups that are in that December quarter number that would make that unusually low? Or is 9% actually indicative of how low it could go?
Mike Munoz: Go ahead, Justin.
Justin Kenna: Yes, I’ll jump in and then Mike, if you want to add some color, feel free. Yes, Sean, we kind of touched on it in the call a little. We had a couple of projects on our — on the agency side of the business where budgets were pulled by clients. I mean, I think we’ve sort of seen that across the industry in general. There were some headwinds that obviously we’ve been having to navigate. I think largely, we’ve navigated them really well. But a couple of projects where budgets were pulled back, we’re doing our best to get those realized here in 2024 and making some really good progress. But in Q4 of 2024, obviously, pulling back a few million dollars on these larger projects that are obviously higher margin in nature, you then get an ultimate revenue mix that has a higher percentage of programmatic revenue.
So certainly not ideal in Q4 and certainly not a trend that you would expect to see continue. We’ve got a really strong pipeline on the agency side. That part of our business is continuing to grow. But it was something that we faced just through to sort of some market headwinds and budgets being bought away. So definitely due to the higher mix of programmatic revenue in Q4 and certainly not something that we expect to see continue.
Sean McGowan: Okay. I have one other question and then I wanted to ask you to clarify something from your prepared remarks. The other question I had was what would give you the confidence that, that pullback that you referenced would not recur? I mean, are people not as concerned about the environment in ’24 as they were in the fourth quarter of ’23?
Justin Kenna: Yes. I mean, I think, so far in 2024, we’ve definitely seen a lot of sentiment shift in the market. I’d say our pipeline is as strong as it’s ever been, if not stronger than ever. I think obviously, bringing in the acquisition of FaZe Clan, we’ve had a huge amount of brand interest. Obviously, FaZe brings some Tier 1 brands in itself and there’s an opportunity there from the services that we currently already provide to be able to up-sell into some of those existing partners. But we’re getting a lot more doors opened currently. We’re starting to see that translate. And so we feel pretty confident in the sort of move-forward strategy. I think last year, as I said, we navigated the pipeline well. We’re still pretty young in the overall sort of life of the business.
And so for us, it’s really about executing with these brand partners when we opened the door, so we can turn them into longer-term relationships and more recurring revenue. And I think we are seeing the recurring revenue base go up. But unfortunately, as we mentioned, there are a couple of larger campaigns that definitely affected Q4 revenue. But we’re seeing those trends shift. We’re getting some deals closed. We’re getting some higher longer-term deals papered and so we feel really good about 2024 and moving forward.
Sean McGowan: Okay. And then the clarification, if I could ask you that, is I think earlier in the call towards the beginning, you mentioned — I think you said $7 million worth of costs that have been taken out. And then later, you referenced $15 million to come. And I was asking you to — I’d like to know how those relate to each other. Is — are they unrelated to? Are they two different kind of cost reductions? Or is one included in the other?
Justin Kenna: Yes. So the $7 million in cost reductions is in relation to the Engine Gaming transaction. In terms of sort of the annualized…
Sean McGowan: And the other one is for FaZe. Okay.
Justin Kenna: Yes. So the annualized costs that we’ve been able to realize by that transaction, I think, the reality is that it’s been pretty tough out there in the micro-cap market. And I think, really, there’s an opportunity for us to start to get to scale, right? There’s no doubt that being a public company is expensive and I think we’re starting to realize that, right? Obviously, we mentioned kind of getting to the $100 million in revenue. That’s one piece, going to get some scale. But obviously, the other important piece is reducing cost and trying to get to profitability. I think we’ve been able to realize some real cost savings as part of the Engine deal. And we think that there’s more than double to be realized here with FaZe and we’ve realized a lot already.
Obviously, there’s head count. But there’s a number of duplication in costs across the businesses and we’ve been able to realize a number of those already. We moved our head office to a new headquarters. Obviously, the corporate costs of being public. Obviously, FaZe was also public. So the list kind of continues. So we’re going to be really aggressive there. We know the revenue piece is important but we’re going to be really aggressive in pulling out those costs this year and showing that trend throughout 2024.
Operator: That concludes the question-and-answer session. I would like to turn the conference back over to Justin Kenna for closing remarks.
Justin Kenna: Thank you. And again, thank you, everybody, for joining the call today. We are very appreciative of the continued support. We’re working around the clock to really drive value for shareholders and feel really good about where the company is positioned to do exactly that. We’re incredibly excited by the FaZe acquisition. I think that we’ve shown a really clear road map on the success that we were able to achieve. Our complexity, if you look at sort of the financials of complexity from the time we took over to ultimately the sale there, I think that’s a really good road map for what we’re able to do with FaZe which is ultimately a much larger brand in terms of audience and reach. So we feel really good and we’re really well positioned.
So, I just want to really thank everybody for joining the call. Thanks, everybody, for their continued support and we look forward to catching up in a month here in May to sort of report back on Q1 and some additional updates. So thanks, everybody. Really appreciate it.
Operator: This concludes GameSquare’s 2023 financial results conference call. You may now disconnect your lines. Thank you for participating and have a pleasant day.
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CENTENNIAL, CO / ACCESSWIRE / April 17, 2024 / NioCorp Developments Ltd. (“NioCorp” or the “Company”) (NASDAQ:NB)(TSX:NB) announces that its board of directors (the “Board”) has approved the voluntary delisting of the Company’s common shares from the Toronto Stock Exchange (the “TSX”) (the “Delisting”). Subject to approval by the TSX, it is expected that NioCorp’s common shares will be delisted from the TSX effective as of close of markets on May 3, 2024. NioCorp’s common shares will continue to be listed and trade on the Nasdaq Capital Market (the “Nasdaq”) under the symbol “NB”.
With more than 90% of its average daily trading volume executed on the Nasdaq, the Board concluded that maintaining the TSX listing does not offer sufficient benefits to the Company and its shareholders to justify the expenses and administrative costs for the continued TSX listing. The Company is not required to seek security holder approval for the Delisting since an alternative market for NioCorp’s common shares exists on the Nasdaq.
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Solaris Resources (TSX:SLS)(NYSEAmerican:SLSR) is gearing up for its debut on the NYSE American. The move involves the discontinuation of its listing on the OTCQB Venture Market, transitioning the trading of its common shares to a more prominent platform under the new ticker symbol “SLSR” starting April 19, 2024. This strategic shift aims to provide Solaris with enhanced visibility and accessibility to a broader base of institutional and retail investors.
The company, which will continue to be listed on the Toronto Stock Exchange under the ticker “SLS”, does not require its shareholders to take any immediate actions regarding this transition. However, those who have purchased shares through the OTCQB are advised to check their accounts to ensure their holdings are updated with the new ticker symbol following the change.
Recent Developments and Strategic Investments
Earlier this year, on January 11, Solaris announced a significant financial boost through a private placement investment from Zijin Mining Group Co., Ltd., amounting to approximately $130 million. This deal resulted in the issuance of over 28 million common shares at a price of $4.55 each, a 14% premium over the closing price on the TSX the day before the agreement was finalized. This transaction marked a substantial endorsement from Zijin, which now holds about 15% of Solaris’ common shares on a fully diluted basis.
Daniel Earle, President and CEO of Solaris, praised the partnership, highlighting Zijin’s remarkable growth and expertise in the mining sector, which spans across 16 countries. The collaboration is set to advance the development of Solaris’s flagship Warintza Project in southeastern Ecuador, with funds also earmarked for general corporate purposes.
The closing of the private placement is contingent upon several conditions, including approvals from the TSX, under the Investment Canada Act, and from relevant authorities in China. Furthermore, the agreement grants Zijin the right to nominate a director to Solaris’s board as long as it maintains at least a 5% shareholding. Zijin also secures rights to maintain its ownership percentage through future securities purchases under specific conditions.
Trilateral Cooperation for Community Development
Additionally, on March 1, Solaris Resources further demonstrated its commitment to sustainable practices by entering a trilateral cooperation agreement aimed at supporting the Shuar communities in Ecuador. This initiative, involving the Interprovincial Federation of Shuar Centers and the Alliance for Entrepreneurship and Innovation, focuses on various developmental programs ranging from health and education to sustainable mining practices.
The collaboration aligns with ongoing efforts to promote economic and social advancement within these indigenous territories, which are integral to the Warintza Project’s success. The comprehensive support from this agreement encompasses health care, education, and business development programs tailored to the needs of the Shuar people, fostering a supportive relationship between the corporation and the community.
As Solaris Resources transitions to a new stage of corporate and community development, the company remains focused on leveraging strategic partnerships and maintaining its commitment to sustainable mining practices, positioning itself for future growth in the global mining sector.
TORONTO, April 16, 2024 /CNW/ – Adam Spence, Founder and Chief Executive Officer, Social Venture Connexion (SVX), and his team joined Robert Peterman, Chief Information Officer, Toronto Stock Exchange (TSX), to close the market and celebrate the launch of SVX Impact Index.
SVX’s mission is to advance social, environmental and economic justice through impact investing. As a nonprofit, diversified financial services firm, SVX works with investors, funds, enterprises, and institutions to help them take the first step or next step on their impact journey. SVX provides knowledge products and programs, designs strategies and products, manages funds, operates an impact investing platform, and develops systems change solutions. A part of their platform, the SVX Impact Index is a comprehensive database featuring the universe of current private impact offerings that are available to Canadian investors.
A part of their platform, the SVX Impact Index is a comprehensive database featuring the universe of current private impact offerings that are available to Canadian investors. The Impact Index features a diverse range of debt and equity opportunities from private equity funds to housing bonds, providing a single access point for impact market information for asset owners, asset managers, researchers, and other key stakeholders in the impact investing ecosystem.
(Bloomberg) — Canada’s decision to increase capital gains taxes was criticized by businesses who warned the move would only exacerbate the country’s investment and productivity woes.
In a bid to raise billions of dollars to help pay for policies to correct a housing crisis which has turned off younger voters, Finance Minister Chrystia Freeland announced the government will tax Canadian companies on two-thirds of capital gains, up from half currently. The change will also apply to individual taxpayers with annual gains over C$250,000 ($181,000). The rules included some exemptions for entrepreneurs and the sale of a primary residence.
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But some businesses said the approach could worsen what the Bank of Canada’s No. 2 official last month called a productivity “emergency.” Canada numbers rate poorly thanks to weak investment in machinery, equipment and intellectual property, the bank’s senior deputy governor Carolyn Rogers said.
The Canadian Manufacturers & Exporters trade association said Tuesday’s tax measures “threaten to dampen Canada’s already weak investment performance” and deter investment. The Canadian Federation of Independent Business, which represents 97,000 small and medium-sized enterprises, said higher capital gains taxes could “de-motivate” entrepreneurs from growing their businesses.
Technology association Technation also highlighted a lack of solutions for Canada’s “productivity gap” in the budget.
‘Shocking’
“It’s a bit shocking — we’re baffled by their decision to move on this,” Kim Furlong, chief executive officer of the Canadian Venture Capital & Private Equity Association, said in an interview. “It signals a clear lack of ambition for growth and scaling. I am certain that, if not reversed, this will add dire consequences for the continued growth of this part of the equity system in Canada.”
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The policy lands amid a difficult fundraising environment, with low liquidity and merger activity, and no initial public offerings, Furlong said.
Read More: Canada’s IPO Drought Reaches a Full Year With No End in Sight
“I think it sends a very negative message,” John McKenzie, CEO of TMX Group Ltd., the parent of the Toronto Stock Exchange, said in an interview on BNN Bloomberg Television about the prospects of tax hikes on the wealthy before the budget was announced. “Let’s be candid, I think this is a mistake for productivity. When you’re talking about more taxes on that income group, you’re talking about the income group that does the most investing into small and medium Canadian companies.”
Tobi Lutke, co-founder and CEO of one of Canada’s most valuable companies, Shopify Inc., posted on X suggesting the tax move would have an anti-innovation effect.
Tax rises risk driving investment over Canada’s southern border into the US, McKenzie and Furlong both said.
The tax-and-spend approach “may prove to be shortsighted and a high-risk strategy in an environment of low productivity and waning economic drivers,” Scotiabank economist Rebekah Young said in a note to clients. “The government continues to take a punitive approach to corporate taxation despite waning momentum in profitability and compressed margins against persistent inflationary, and relatedly wage, pressures.”
