Another Canadian unicorn, Trulioo Information Services Inc., has laid off staff, although the Vancouver company says its cuts are not part of a broad belt-tightening effort to gird for worsening economic conditions, as has been the case across the sector.
Trulioo CEO Steve Munford said in an interview the provider of online identity-verification services to digital companies had laid off 24 people earlier this month in Canada and expects total cuts to reach 40 to 50 globally, amounting to between five and 10 per cent of staff.
The cuts stem from the company’s decision to stop selling to small businesses, a market segment that had accounted for just three per cent of the company’s $100-million-plus in annual revenue but used half of the company’s “go-to-market” resources, namely marketing and sales staff. The cuts were focused exclusively in that area, and “not a single person in engineering, product development, product management, any general and administration, legal, partnerships was affected,” Mr. Munford said. “It was really an economic business decision driven by that segment. We were losing money” selling to small businesses. “We’re focusing on where 97 per cent of our revenue is and what is driving our growth” in the larger enterprise segment of the market.
Trulioo has the capability to digitally confirm the identities of most people on the planet and hundreds of millions of companies. Clients of Trulioo, which has more than 400 employees, include payment processors, online marketplaces, cryptocurrency exchanges and financial services giants.
It was one of several Canadian technology companies that decided earlier this year to scale back hiring plans as a precautionary measure as high inflation, rising interest rates and other geopolitical and economic challenges weigh on economies globally. However, while several other money-losing tech companies have since announced deep reductions to their ranks to conserve cash, Trulioo does not foresee having to do that, as it has typically operated at or above break-even on an operating basis – a relative rarity among growing, early-stage companies.
“If we had any inclination we’d need to do further reductions in the near future we would have done it at once,” said Mr. Munford. “But we don’t.”
Although Trulioo is forecasting slower revenue growth in 2022 than the 100 per cent increase it experienced last year, “the fundamentals of our business are strong,” Mr. Munford said.
He added the company still has “a strong cash balance” after it raised US$394-million last year in a deal led by Silicon Valley TCV that valued Trulioo at US$1.75-billion post-funding (startups valued at more than US$1-billion are known as “unicorns”). Other investors include Blumberg Capital, Mouro Capital, the venture capital arms of Citigroup Inc. and American Express Co., Goldman Sachs Group, Banco Santander and Framework Venture Partners.
“If you look back at past economic cycles, companies with strong balance sheets and that stay the course ultimately own their markets. They’re not the ones that had poor economics before or were constantly raising money or had high cash burn rates and couldn’t afford to withstand these cycles. Those are the ones that face challenges, and that’s not us.”