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In La Presse: A good crisis for Mediagrif

The following article has been translated from the original (Une crise salvatrice pour Mediagrif) with the authorization of the journalist (Richard Dufour) and the media (La Presse).

Like Shopify, the company develops e-commerce platforms

After seeing its profitability erode, Longueuil-based tech firm Mediagrif notes that the COVID-19 crisis has had an unexpectedly positive impact on its activities.

"The pandemic has been positive for Mediagrif," said Luc Filiatreault, CEO of the company that specializes in electronic commerce.

“We have returned to very high profitability since March. And April was even better," he adds.

“We are seeing really interesting growth during the pandemic."

- Luc Filiatreault, CEO of Mediagrif

Mediagrif not only did not lay off any staff but has hired additional staff in the past few weeks.

E-commerce, particularly in the grocery sector, and the strategic supply of various governments and government agencies - through the MERX online call for tenders service - are currently performing extremely well, says Filiatreault.

He points out that the Société québécoise du cannabis website is powered by Mediagrif and that SQDC's online sales are increasing “staggeringly.” "The more our sites work, the more money we make," he says.

The grocer Sobeys / IGA, the Société des alcools du Québec and the Forzani Group (Sports Experts) are other well-known companies that use Mediagrif systems to power their e-commerce operations.

It will take another month to measure the impact of the pandemic on Mediagrif’s financial performance. The results for January, February and March will be published on June 9.

THE SHOPIFY EFFECT

Filiatreault is also pleased with an analogy comparing Mediagrif to Shopify made last week by a Montreal portfolio manager on the BNN Bloomberg financial network.

"The Shopify effect is a very strong idea that helps people understand what we do at Mediagrif. It's a good analogy," says Filiatreault.

"It is very fair from a technological point of view. We do essentially the same thing as Shopify. The difference is that Shopify does it for small businesses, while Mediagrif does it for big companies and governments."

Filiatreault explains that Mediagrif works with larger, more complex systems, which must connect, for example, inventory management and delivery systems, integrate with different payment methods, communicate with financial systems, and other complex operations. “Shopify does it on a smaller scale, but obviously with a much higher number of customers," says Filiatreault.

Filiatreault joined Mediagrif as CEO in September and isn’t shy about his ambitions. His five-year goal is to triple annual revenues to $250 million and more than double the number of employees to 1,500, in order to multiply the market value by 10 and push Mediagrif’s valuation to $1 billion.

"If you reach $250 million in [annual] sales, generate profitability and growth above 40%, and apply the multiple that we observe in the market, that adds up to $1 billion," he said.

According to Filiatreault, the market gives Mediagrif a significantly lower valuation than the average for comparable companies, a situation he blames on a lack of communication.

“We are unknown. We realized that people don't really know what Mediagrif does. The management never organized conferences with analysts and investors [and] operated as a private company, stayed in its corner. This is something that is changing. "

- Luc Filiatreault, CEO of Mediagrif

Filiatreault acknowledges, however, the "decrease" in Mediagrif’s financial performance. "Unfortunately," he says, "there has been no reinvestment in the business. There has been no modernization. Very little money has been put into the sales force. Mediagrif has made acquisitions over the years that have barely been integrated. The company had managed to cut costs, but at one point [the strategy] no longer worked."

"Mediagrif has experienced moments of very high profitability, but I would go so far as to say of too high profitability," he says.

An example he often cites is that of a St-Hubert restaurant. "If you have a brown and orange St-Hubert, like [they once were], and you have never renovated it, never brought it up to date, you still sell chicken and it's always the same recipe. But today, the St-Hubert has a bar, music and a children's corner. It is obvious that without improvements over time, the restaurant will not perform very well. Part of the profits must be reinvested in the business in order to keep it alive."

Filiatreault believes it is important for Mediagrif to keep its technology up to date. “We have just released a new version of our Merx.com site. This site has been operating with the same interface for 17 years and did not even work on mobile. It is the number one strategic sourcing site in Canada. This is one of the investments we have just made, which explains why our profitability has recently declined."