With dark clouds seemingly everywhere on the economic horizon, Denis King is the rare tech executive who still sees plenty of blue sky above for his fast-growing software company.
The CEO of Ottawa-based Solace says there’s been no slowdown in demand for the firm’s platform that helps smooth the flow of information between end points like mobile devices and data centres, despite supply-chain woes, soaring inflation and other economic headwinds that have been dogging the tech sector for the better part of the past year.
“We’ve been on an amazing run,” says King, whose firm was one of three local companies that recently made Waterloo-based innovation hub Communitech’s list of Canadian tech enterprises most likely to achieve $1 billion in annual revenue.
“I think big picture, businesses have a need for faster data, real-time data. We tend to stay on the top of the priority list when things are being cut because when you have faster information, it drives better customer outcomes, and in some ways it drives lower costs.”
Indeed, while tech powerhouses like Shopify have been forced to scale back growth projections amid a widespread market selloff that’s battered the software sector in 2022, Solace has continued to soar.
“The path to a billion is not unrealistic. I think we’re doing all the right things to make it happen.”
The firm’s revenues rose 52 per cent in its fiscal second quarter that ended Monday compared with a year earlier. Over the past 11 months, Solace has added more than 100 employees to its headcount, which now exceeds 500.
And King thinks Solace is just getting started. While reliable market analysis of the nascent “event-management” software space is hard to come by, the veteran exec pegs the total addressable market for his firm’s products at anywhere between $15 billion and $30 billion.
When asked whether he thinks Solace has a legitimate chance to reach the lofty heights that Communitech’s number-crunchers project for it, King doesn’t hesitate to reply in the affirmative.
“This is still a market that is (in its) early days,” he says. “The path to a billion is not unrealistic. I think we’re doing all the right things to make it happen.”
In a world where streams of data are constantly flowing from one point to another at lightning speed through a series of “events” – say, the swipe of a credit card or a scan of a boarding pass – Solace’s products aim to smooth out bumps along the way, ensuring that traffic moves between data centres, mobile devices, software applications and all points in between as quickly and securely as possible.
Founded in 2001 with backing from Kanata tech magnate Terry Matthews, the company originally catered mainly to the financial services industry.
Diversified customer base
Over the past few years, Solace has broadened its customer base as the number of wireless devices that communicate with each other has grown exponentially and the e-commerce boom has fuelled a need for real-time inventory data that’s caused a “fundamental shift” in the market, King explains.
Before the pandemic, Solace had just two retail customers. Today, nearly 40 of its 200-plus clients are in the retailing and industrial packaged goods space, including German-based grocer Schwarz Group, the world’s fourth-largest retailer.
In addition, Solace signed an agreement with SAP earlier this year that sees the German enterprise management software giant act as a reseller for the Ottawa firm’s products. King says the deal has already generated a sales pipeline worth “several million dollars,” with potential for much more.
“There’s really no limit to how big that could become,” he says.
While King wouldn’t reveal Solace’s annual revenues, he says they’re “in the ballpark” of the $132-million average for the 61 companies on Communitech’s list. Meanwhile, the firm expects to hire at least another 50 employees by the end of 2023 as it continues to expand into new markets and verticals.
Still, King admits to a “healthy paranoia” as he tries to forge a path to a billion-dollar company. Solace’s software is no small investment, with contracts routinely in the range of six figures or more, and the CEO worries a recession could dampen demand for the products if cash-strapped IT departments decide to trim costs.
“I’m watching whether our deal cycles are lengthening, budgets are getting slashed, are we being prioritized,” he says.
At the end of the day, though, King believes Solace’s value proposition will be too strong for customers to ignore.
“Lots of challenges, but I feel pretty good about where we are,” he says.