Jeff Shiner, CEO of 1Password attends the Collision Conference, in Toronto, on June 19, 2024.Chris Young/The Canadian Press
1Password, a top candidate to kick off Canada’s next technology initial public offering boom, is unlikely to take the public markets plunge before 2026 – although there is a chance it could happen this fall, its co-chief executive officer said.
“We believe this will be a public company some day and that is how we’re building the team and scope,” said David Faugno, who was appointed in November to share the password management company’s top job with long-time CEO Jeff Shiner. “We’re in the fortunate situation where we get to call the shot on when that happens.”
1Password, officially called AgileBits Inc., has been warming up public markets players, speaking with analysts, investors and investment bankers in recent months. It has also stacked its leadership with public markets veterans. Last week, it appointed Greg Henry as chief financial officer; he previously took database enterprise applications company Couchbase, Inc. public in 2021 as its CFO. Mr. Faugno himself was CFO of U.S. marketing software giant Qualtrics International Inc. when it went public in 2021. Mr. Henry’s predecessor, Jeannie De Guzman, is now 1Password’s chief operating officer.
But Mr. Faugno said 1Password would need “four to six months of final work” before going public. “Our objective is to always be ready to pull that trigger for that four to six month sprint. We’re not in that now. I can’t tell you when that will start.” He said a recent Bloomberg report that 1Password was interviewing bankers to lead an IPO was false. “When we do a bakeoff for an IPO, that will be another day. That day has not passed.”
Mr. Faugno indicated Toronto-based 1Password could go public as early as this fall. “If we felt like being public this year was important, there is probably an opportunity to do that.” He added: “I wouldn’t say it’s a zero” chance in 2025, “but it’s unlikely.”
A rash of global tech companies are considering IPOs after a three-year drought. Austin, Tex.-based cybersecurity company SailPoint, Inc. went public last month, and several U.S. tech companies have filed to go public or are preparing to do so, including CoreWeave, Inc., MNTN, Inc., Klarna Bank AB, Hinge Health, Inc. and Discord Inc.
While market watchers had expected tech IPOs to pick up this year, the second Donald Trump administration has brought uncertainty and instability. The U.S. President’s ever-shifting threat of tariffs and evolving stance on Europe including the Russia-Ukraine War has roiled markets. That has prompted some companies to delay their IPOs.
1Password is one of Canada’s most successful private tech companies. The profitable, 1,400-person business generates more than $300-million in annual recurring revenue (1Password disclosed 18 months ago ARR had reached $250-million; Mr. Faugno declined to provide an update but said enterprise sales, which comprise three-quarter of revenues, were growing by 30 per cent-plus).
Its product automatically creates and stores complex passwords for users so they can auto-fill login credentials across websites and platforms. Customers, including millions of consumers and employees at 150,000 governments and companies, only have to remember one master password to unlock their codes.
Last year, 1Password extended its enterprise platform to make it easier for IT departments to deal with hybrid workforces, enabling employees to manage passwords across the apps and devices. Growing that business is a key focus, said Mr. Faugno. (1Password is itself a hybrid company: Top executives live in Southern Ontario, Ottawa, Montreal and three U.S. states; Mr. Faugno is based in Scottsdale, Ariz.)
The company was founded two decades ago by friends Dave Teare and Roustem Karimov and their spouses to build websites. As a sideline, they developed a tool to automatically and securely store information, including passwords. They uploaded the tool to developer websites and got strong feedback, prompting them to focus on marketing the password storage tool. The business took off and in 2012 they recruited Mr. Shiner, a friend of Mr. Teare’s, to become CEO.
Emboldened by their success, the group decided to raise capital, recruit seasoned executives and build out functions such as sales and accounting. Silicon Valley venture capital firm Accel Entertainment Inc. led a US$200-million investment in 2019, followed by a US$620-million all-star financing in 2022 valuing 1Password at US$6.8-billion as the pandemic tech bubble deflated. Investors in that deal include Iconiq Capital, the family office for tech luminaries including Mark Zuckerberg, Sheryl Sandberg and Chamath Palihapitiya; corporate titans Henry Kravis, James Murdoch, Robert Iger and Mary Barra; and celebrities Robert Downey Jr., Chris Evans, Scarlett Johansson, Matthew McConaughey, Ryan Reynolds, Justin Timberlake and Pharrell Williams.
Mr. Faugno, who was a 1Password adviser and director representing Accel before becoming president in 2023, said the company has key attributes for a successful IPO: It’s a decent size, growing steadily, making money and operating in cybersecurity. “Demand for an asset like 1Password is strong and we think it will continue to be strong.”
He said when 1Passsword does go public it could dual-list in Canada and the U.S., as Shopify Inc. did in 2015, though no decision has been made. “We’re very proud to be Canadian.”