Why This Tech Stock Could Be the Next Shopify

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21 hours ago

Written by Amy Legate-Wolfe at The Motley Fool Canada
Shopify (TSX:SHOP) is often the gold standard when it comes to Canadian tech success. It went from a little-known e-commerce company to one of the biggest stories on the TSX. So whenever a new name comes up with similar growth potential, it's worth paying attention. That's why Topicus.com (TSXV:TOI) is starting to get noticed. It doesn't have the flash of Shopify, but it has been quietly building something impressive. And for long-term investors, it could be one of the most exciting tech stocks on the market today.
Topicus is a software company that focuses on vertical markets. That means it develops and acquires software tailored to specific industries like healthcare, education, and government. It's not trying to be everything to everyone. Instead, it wants to dominate smaller segments by offering exactly what those users need. This model allows it to grow quickly and maintain sticky customer relationships, since these tools are often deeply embedded into a company's day-to-day operations.
The tech stock was spun out of Constellation Software in early 2021, and it has inherited some of the same strengths. Like its parent, Topicus is all about acquisition-led growth. It buys up smaller software firms, integrates them into its structure, and uses that foundation to continue growing. This buy-and-build strategy has worked well for Constellation, and Topicus is following a similar path.
As of its latest report for the first quarter of 2025, Topicus posted revenue of €506 million, which is about $556 million in Canadian dollars. That was up from €451 million the year before. Net income came in at $37.4 million, with earnings per share (EPS) of $0.47. The tech stock continues to reinvest in operations and acquisitions, which can pressure short-term earnings but support long-term value creation.
What makes Topicus exciting is its consistency. Over the past five years, it has grown earnings by 46% per year and revenues by 22% annually. Its return on equity sits at a strong 22.4%, and its profit margin is around 7.3%. Those are healthy numbers for a company in growth mode. These show it isn't just burning cash to expand. It's building a sustainable business with real profits and strong cash flow.
The tech stock trades at a high valuation at about 93 times trailing earnings. That might scare off some investors, but it reflects the market's belief in Topicus' growth potential. Its market cap has now reached $22.7 billion, which is impressive for a tech stock still listed on the TSX Venture Exchange.
There are risks, of course. The tech stock is highly acquisitive, so it depends on finding good businesses to buy at reasonable prices. Integration risk is real. If one of its acquisitions underperforms or doesn't mesh well with the rest of the business, it could drag down results. Macroeconomic issues in Europe, where many of its customers are located, could also impact demand.
Still, Topicus has shown it can handle these challenges. Its focus on vertical markets gives it a defensive edge. Even during tough times, many of its customers can't easily switch to another provider. The software is too deeply ingrained in their daily operations. That helps keep revenue steady and allows Topicus to continue scaling over time.
It might not become the next Shopify in terms of market cap, but Topicus has a real chance to become a dominant force in its own space. It's already proving that growth and profitability can go hand in hand. For investors looking for a Canadian tech stock with a long runway ahead, Topicus is a name to watch. And maybe, just maybe, it's the next big thing.
The post Why This Tech Stock Could Be the Next Shopify appeared first on The Motley Fool Canada.
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Fool contributor Amy Legate-Wolfe has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Shopify and Topicus.com. The Motley Fool recommends Constellation Software. The Motley Fool has a disclosure policy.
2025
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