Halogen Software is making a lot of right moves at the right time.
Halogen, which produces talent management software intended to help companies manage, educate, and recruit employees, went public on May 17, 2013, selling 4.8 million shares. It is currently the only Canadian technology IPO so far this year and one of only 13 technology IPOs globally.
Halogen is also in one of the most promising markets. Software is one of two technology categories doing well this third quarter, writes Raman Chitkara in PwC’s Global Technology IPO Review. The Internet software and services sector and the software sector have together recorded the most deals, according to the PwC report, which has a global outlook.
“Continued demand for innovative software tools to expand and improve products and services for companies both within and outside the technology industry are fuelling this performance,” reports Chitkara.
Halogen is the leading talent management vendor in the mid-market, according to a summary of National Bank’s Kris Thompson’s coverage on Halogen Software, from the Wellington Financial site.
The talent management software market has generally been an untouched opportunity globally so far, says Halogen’s chief financial officer, Pete Low. The Kanata-based company does not want to see this market taken by its competition and going public was viewed as an effective way to capture the customer base first, explains Low.
Expanding its reach
Halogen generated record revenue in its third quarter ended September 30, reporting a 27 per cent increase to US$12.3 million from $9.7 million last year. The growth in revenue helped reduce Halogen’s loss for the quarter to $718,000 from $1.9 million in the same quarter last year. Halogen attributed the improvement in net loss to having gone public in May, according to its MD&A report.
Revenue growth in Halogen’s international markets has increased by 66 per cent since the third quarter last year, states the company’s most recent MD&A document. This growth was largely credited to the opening of its Sydney, Australia sales office in 2012. Halogen also has an office in London, England that opened in 2011.
“We believe the rest of the world outside of North America is a little bit behind in adopting talent management solutions, so we believe it is time to go after those markets,” says Low.
The software company chose to expand to Australia and the UK first due to the cultural similarities between these two areas and North America, says Low. Halogen considers other common factors before expanding to international markets as well, including whether the language of business is English, where the country is in terms of talent management adoption rates, and Halogen’s ability to provide good customer service, explains Low.
Halogen currently has more than 1,750 customers who purchase on average 2.2 modules out of the seven currently available, says Thompson in the news summary.
Halogen’s expenses increased to US$9.6 million in the third quarter from $7.8 million this time in 2012. Expenses were incurred due to the steady increase of investments to grow the business, according to the company’s MD&A document. These expenses were mainly from sales and marketing as well as research and development, states the MD&A.
Halogen will release two new modules to add to its talent management software line-up by the end of this year. The 1:1 Exchange module is the first of its kind and is intended to facilitate discussion between employers and workers. The company also introduced its Halogen Myers-Briggs® module which will use the popular personality tests to evaluate and develop talent and build strong working relationships. Low says the company will maintain its focus on creating software solutions to help manage people and in turn, company performance.
In addition to its plans to invest in new modules and product features and in expanding into new international markets, Halogen intends to gain new customers in its current locations of Canada, Australia and the UK, says Low. This will require growth in sales people, marketing people and client services people, adds Low.
Halogen’s overarching goal is to eventually become a Canadian powerhouse, says Low.
“It’s a long-term view and a long-term goal and hopefully as we move through the years and succeed on that goal…employment will rise at Halogen and be able to provide some valuable jobs to people in the local community,” says Low.