The company’s stock opened at 26 cents, 4% above its offer price of 25 cents. It then rose as much as 17% to an intraday high of 30.5 cents before closing at 28.5 cents. As at Feb 10, Toku’s stock closed at 22 cents.
“We chose to live here in Singapore, deliberately,” Toku’s CEO Thomas Laboulle told attendees at the company’s listing ceremony on Jan 22. “Too often, technology companies from Asia look elsewhere for their public market milestones. We believe that can change.”
Most Singapore-based tech giants have chosen to list in foreign markets instead of in Singapore. Shopee’s parent company, Sea and ride-hailing giant Grab are listed on the New York Stock Exchange and Nasdaq, respectively. Razer, the gaming hardware company, was listed on the Hong Kong Stock Exchange from 2017 to 2022 before it was delisted.
This makes Toku’s decision relatively rare and bold. Laboulle told The Edge Singapore that the listing decision was partly due to its marquee clients being either Singaporean or regional brands. It was also a bet on the initiatives made by the Monetary Authority of Singapore and SGX to bolster the Singapore stock market. “I liked what I saw and heard about the revival of SGX, and all the efforts that were coming together. I genuinely believe in what they are trying to achieve.”
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On the surface, investing in Toku seems risky. While the company’s revenues grew by 47% from $21.6 million to $31.8 million between FY2022 and FY2024, its losses widened by 32% from $3.97 million to $5.26 million over the same period.
KGI Securities analyst Chong Ting Shuo says in his non-rated report dated Jan 15 that Toku’s IPO proceeds are “expected to accelerate its path to profitability by enabling growth initiatives” such as widening its product offerings to include AI-assisted live agents and acquiring regional competitors. Toku raised $16.25 million from its listing, giving it a post-IPO market capitalisation of $142.56 million.
Losing money at the outset is common among most technology companies. For instance, Amazon did not turn a full-year profit until nearly a decade after its founding. “Well, we are a famously unprofitable company,” Amazon founder Jeff Bezos told the BBC in a 2000 interview. “And that is a conscious strategy and an investment decision.”
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That logic is at play in Toku, too. According to Laboulle, Toku’s losses are a byproduct of its investments in legal and regulatory areas, enabling it to land major contracts with clients such as government agencies. This has paid off for Toku, he adds, as they have been able to raise their prices while still being 50% cheaper than their rivals.
Pricing power and stickiness are invaluable assets to have for a company operating in the enterprise market. The fact that Toku has been able to retain customers such as the grocery and food delivery platform foodpanda and the ride-hailing platform Gojek suggests it has entrenched itself. Being a publicly listed company will only strengthen its value proposition and credibility as it expands across Asia and Latin America.
“So far, we haven’t seen any of our enterprise clients leave. That justifies the growing pains and the investment required to serve the enterprise market,” Laboulle says.
